Policy clarity, bearish warnings, and weak positioning deepen crypto’s latest sell-off
Bitcoin extended its recent downturn on Wednesday, falling roughly 2% to around $73,000 after comments from US Treasury Secretary Scott Bessent undercut hopes of any potential government support for the digital asset. The decline added to an already sharp pullback that has pushed the world’s largest cryptocurrency down 13% over the past five days.
During a tense House Financial Services Committee hearing, Bessent was asked whether the US Treasury had the authority to buy bitcoin or other cryptocurrencies. His response was unequivocal. “I do not have the authority to do that, and as chair of FSOC, I do not have that authority,” he said. The remarks reinforced the view that, unlike traditional financial markets, crypto should not expect a government backstop during periods of stress.
Broader market pressure compounded the move lower. Risk assets have been under strain amid shifting expectations for US monetary policy, particularly after President Trump’s announcement that Kevin Warsh would succeed Jerome Powell as Federal Reserve chair, a choice widely viewed as hawkish. Ether and other digital tokens also slid alongside bitcoin.
Sentiment took another hit after prominent investor Michael Burry warned that a sustained decline in bitcoin could trigger what he described as a “death spiral leading to massive value destruction.” In a Substack post, Burry argued that bitcoin has been exposed as a purely speculative asset rather than a reliable hedge against currency debasement, contrasting it unfavorably with gold and other precious metals.
Market data suggest traders remain defensive. According to 10X Research, flows and positioning indicate investors are still focused on deleveraging rather than preparing to buy the dip. With bitcoin now testing support near $73,000, analysts say sentiment has shifted meaningfully, even as technical indicators approach oversold levels.
Not all observers are uniformly bearish. Fundstrat’s Sean Farrell noted that the mid-$70,000 range represents a logical support zone based on prior trading history, potentially offering a more attractive near-term risk-reward setup. Still, he cautioned that conditions remain fragile, with downside risks from both crypto-specific dynamics and broader market positioning.
For now, bitcoin’s slide reflects a market grappling with tighter policy expectations, waning speculative appetite, and the realization that government intervention is unlikely to provide a safety net.
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