The world's largest cryptocurrency - Bitcoin experienced its biggest crash since 2022 last weekend. Its value was $120,000 in October, but last Friday the price fell to $60,000. Thus, the illusion that Bitcoin had turned into a new gold capable of preserving assets during a period of financial turbulence was shattered.
The price to pay for the dream of profiting from cryptocurrency was very steep: Bitcoin's price dropped from $120,000 to $60,000, and its market capitalization fell from $4.3 trillion to $2 trillion. It is true that Bitcoin later recovered some of its losses, rising above $64,000. However, these are still the lowest levels since about a month before the U.S. presidential elections, when Donald Trump expressed his support for the crypto industry, that is, since October 2024.
“Yeni Müsavat” reports that Mikhail Gordiyenko, a professor at the Sustainable Development Finance Department of the Plekhanov Russian University of Economics, speaking to Russia's “Vzglad” publication, said the decline is extremely rapid and deep. Bitcoin has lost about half of its value since its peak, with hundreds of billions of dollars in market capitalization disappearing within a few months, which the financial market calls an unconditional crash.
According to the professor, the secret of Bitcoin's “Black Friday” in February should be sought not in the cryptocurrency itself, but in the illusions surrounding it. Since its October peak, the leading digital coin has nearly halved in value. Denis Astafyev, founder of the “SharesPro fintech” platform, explained that the main reason for the collapse is Bitcoin's connection to the technology sector. “Due to fears related to artificial intelligence, when software stocks fell 20-28% in early February, Bitcoin fell along with them. Meanwhile, gold rose during the same period. For the first time, Bitcoin’s correlation with gold became negative. When markets seek security 'cushions', they invariably turn to gold. Those who did not believe in 'digital gold' at first now celebrate their victories because they have insured against risk. Bitcoin has always been an asset for growth, not capital preservation. Gold has proven its role as a stable finance medium for centuries. Bitcoin has not done that in 15 years. It has integrated not as an alternative to the global financial system, but as another risky instrument," Astafyev said.
All this story means one thing for those who believe in cryptocurrency: everyone will face losses; no one can escape financial losses. According to experts, large companies holding Bitcoin in their balance sheets will face billions in losses, but these will mainly be cash losses.
The most loyal supporters of cryptocurrency have also suffered losses; in particular, Michael Saylor's Strategy Inc. recorded a $12.4 billion loss. However, experts do not completely write off Bitcoin. Considering its ongoing correlation with the technology sector, Bitcoin could drop below $50,000 within a year, especially if the technology sector continues to correct by 10-15% next quarter. But prices are not expected to exceed $120,000 this year because the market is entering a phase of caution and risk aversion – liquidity moves into defensive assets and institutional buyers become more cautious.
Nikolay Dudchenko, an analyst at “FG Finam”, believes that Bitcoin’s three-to-six-month outlook will mainly depend on whether its price can hold above $65,000. If not, the price will fall below $60,000. If this level breaks, the probability of the price falling to $50,000 increases. Experts do not exclude a rise to $95,000-$100,000, but then a decline will resume.
Vladimir Kozinets, president of the Corporate Treasurers Association, expects no crash; rather, he believes sharp rises and falls are a normal phenomenon for a highly volatile investment asset. He explains that a crash will happen only when Bitcoin reaches zero: “Neither fundamental forecasts nor, in a sense, technical forecasts apply to Bitcoin. There is a saying that a samurai has no goal, only one path. This applies to Bitcoin as well. It lives its own life and exists in its own universe. It makes sense to look at its dynamics over several years within a moving average. Then you will see that it is still growing. There is also a saying that it is always too late to buy two assets: Bitcoin and real estate in Moscow.” He recommends limiting Bitcoin to 5% of the investment portfolio.
According to experts, demand for Bitcoin will not disappear completely, but will change: speculative euphoria, fast money, and belief in “eternal growth” will be absent for some time; more cautious investors will trade in small volumes after declines rather than with hype. The cryptocurrency market may become stricter, more pragmatic, and professional.
Bitcoin is not a fully legal payment method for cryptocurrencies in Azerbaijan, and this field is still not fully regulated in the country. In 2023, the volume of crypto transactions in Azerbaijan was approximately $4.4 billion, with about 120,000 users registered in the country.
This means that the market is still relatively small but a significant asset for a certain group of investors. Azerbaijani banks do not openly support Bitcoin transactions, but some citizens can manage their investments through crypto. Such a crash may not have a direct impact on the banking system because Bitcoin is not an official currency or a banking product. Even if Bitcoin collapses, it is unlikely to have a significant direct effect on the Azerbaijani manat exchange rate, since the country’s economy depends more on oil and gas revenues. As long as there are no changes in global energy markets, Bitcoin’s price will not directly affect the manat’s value. The widespread risk of Bitcoin’s collapse may cause investors to lose trust. This could increase the demand for higher financial literacy in Azerbaijan and encourage avoidance of risky investments.
“Yeni Müsavat”