The cryptocurrency market recently faced its most turbulent period in 2025, resulting in a significant decline that wiped out over $1.2 trillion in value. Bitcoin (BTC) saw its price drop from a brief peak of $120,000 to around $80,000.

For many investors, the rapidity of this sell-off felt reminiscent of previous downturns in 2017 and 2022. In the latest episode of Byte-Sized Insight, experts discussed why this downturn is different and likely less severe than what headlines suggest.

Bitcoin’s Sensitivity to Market Liquidity

Macro analyst and writer Noelle Acheson remarked that the recent dip is mainly a liquidity-driven correction due to changing expectations regarding Federal Reserve rate cuts. She emphasized:

“Bitcoin is one of the most sensitive assets to liquidity sentiment.”

Acheson highlighted that Bitcoin’s supply is capped, with demand influenced by market sentiment. She pointed out that during this downturn, Bitcoin’s and Ether’s (ETH) market dominance declined not due to rotation to safer crypto alternatives but rather a complete withdrawal from crypto to non-crypto investments. She interpreted this as a sign that cryptocurrency is increasingly influenced by broader macroeconomic factors and institutional positioning.

Maturity in Market Response

According to Tim Meggs, CEO and co-founder of Lo:Tech, the current downturn indicates maturity in the market. Unlike previous conflagrations that resulted in immediate liquidations, he described this recent decline as measured, reflecting the slower responses of institutional investors now involved in cryptocurrency.

“Institutions don’t operate at the pace retail does.”

Meggs also noted that recent stabilization and indicators of renewed positioning suggest that such corrections can be healthy and necessary, stating:

“Flushing out excess leverage isn’t a bad thing.”

The Lack of a Strong Market Narrative

Glen Goodman, a trader and author, remarked that the absence of a compelling market narrative has exacerbated the recent downturn. In the past, Bitcoin thrived on narratives from ‘global currency’ to ‘digital gold’. Today, lacking a strong narrative, cryptocurrency has become more susceptible to volatility associated with technology stocks and general macroeconomic pressures.

For the full discussion, listen to the complete episode on Cointelegraph’s Podcasts page, Apple Podcasts, or Spotify.