Bitcoin gets slashed in half. What’s behind the crypto’s existential crisis

Bitcoin tumbled toward $60,000 this week as investors reassessed its utility. And while there isn’t one clear catalyst driving the bloodbath, one thing is clear: the crypto market is in crisis. 

“There’s nothing going on in the marketplace that should have necessitated this type of a crash,” Anthony Scaramucci, founder and managing partner of alternative investment firm SkyBridge, told CNBC. “And so I think that’s made people, frankly, more fearful. … You have to ask yourself, ‘is it over for bitcoin?'”

Bitcoin fell as low as $60,062 on Thursday, bringing it to its lowest level since Oct. 11, 2024. That’s more than 52% off from its record high of $126,000 hit in early October 2025.  

The previous session marked one of bitcoin’s bloodiest ever, with the token shedding more than 15% on the day. Its daily relative strength index fell to 18, putting the asset in extremely oversold territory. As of Thursday, other digital assets like ether and solana were also down 24%  and 26% for the week to date, respectively — a sign investors’ confidence in the entire crypto market is faltering.

Bitcoin was rebounding on Friday, with the token last trading at $69,631.97, up more than 9% on the day.

But, its recent drawdown has prompted investors to reevaluate its utility, including its role as a digital currency or as a store of value. Simultaneously, institutional appetite for the flagship crypto appears to be waning as spot bitcoin exchange-traded funds record outsized outflows, threatening to drive bitcoin deeper into the red. 

“This time is markedly different from other bear markets, however, in that it’s not in response to a structural blowup,” Jasper De Maere, desk strategist at crypto market-making firm Wintermute, said in a statement shared with CNBC. “It’s a fundamentally macro-driven deleveraging tied to positioning, risk appetite and narratives rather than systemic failures within crypto itself.”

Over the past few months, investors have grown increasingly skeptical of efforts to recast bitcoin as “digital gold,” or an alternative to traditional safe havens such as gold. Bitcoin is down 28% over the past 12 months, while gold is up 72% during the same period — a testament to the latter’s utility as a hedge against macro risks.

Conversely, bitcoin has often traded down alongside other risk-on assets such as equities amid periods of high macroeconomic and geopolitical uncertainty, raising doubts about its utility as a safe haven. Nearly a week after Trump’s “liberation day” tariff announcement on April 2, 2025, bitcoin had fallen about 10% to below $80,000, while the S&P 500 had declined roughly 4%. 

Separately, investors are also reassessing the extent to which financial institutions, treasury firms and governments are willing to adopt bitcoin — a major catalyst for the token in recent years. 

Large institutional outflows are mounting as…