Despite a welcome bump today, the Bitcoin (CRYPTO: BTC) price has lost more than half of its value since October.
In early afternoon trade on Thursday, the world's first and biggest crypto is trading for US$60,080.
That's up 2.4% since this time yesterday, with the token having hit a 24-hour low of just US$58,263.
Taking a step back, though, we see that the Bitcoin price is down 15% over the last month and more than 52% since hitting a record high of US$126,198 on 7 October.
So, what on earth is going on?
Image source: Getty Images
Why has the Bitcoin price collapsed by more than 50%?
Among the stiffer headwinds battering the world's number one crypto is the pullback from the so-called debasement trade.
As a reminder, the trade has seen investors the world over buying cryptocurrencies and precious metals like gold as a hedge against a falling US dollar.
But those bets are quickly coming undone as the market reassesses the outlook for US interest rates amid resurgent inflation and under the leadership of newly appointed Federal Reserve Chairman Kevin Warsh.
Indeed, with expectations of US Fed interest rate cuts replaced by potential rate hikes, the US dollar has strengthened against most major international currencies.
And the greenback's revival has sent the gold and Bitcoin prices tumbling. At US$4,049 per ounce today, the gold price is down more than 25% from its January record-highs of around US$5,400 per ounce.
Commenting on the reversal in investor sentiment, SPI Asset Management partner Stephen Innes said (quoted by The Australian Financial Review):
The old bull market fed on falling confidence in the dollar. It flourished when investors believed deficits would expand, inflation would linger, and policymakers would eventually choose financial repression over discipline. But a hawkish Fed chair changes the balance of forces.
Looking at what might impact the Bitcoin price ahead, IG market analyst Tony Sycamore advised crypto investors to keep an eye on the US jobs market.
According to Sycamore:
A strong print showing continued labour market resilience would likely reinforce the hawkish tilt at the Fed. That, in turn, would put the debasement trade under further pressure, as it becomes increasingly difficult to justify holding non-yielding assets in a world of higher rates and a stronger US dollar.
What about the Ethereum (CRYPTO: ETH) price?
It's not just the gold and Bitcoin prices that have been taking a beating.
Currently trading at US$1,617, Ethereum is down 18% over the last month and 33% since this time last year.
The world's number two crypto has now lost more than 67% of its value since hitting its own all-time high of US$4,954 on 25 August 2025.
