The volatility we’ve seen become pervasive among risk assets has more than bled through into the cryptocurrency sector. Three of the most-watched (and most valuable) tokens today are Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE). These digital assets have lost 2.9%, 2.8%, and 5.7%, respectively, over the past 24 hours as of 3 p.m. ET.
These moves have coincided with a broader pause in other risk assets ahead of what should be a very influential Federal Reserve decision tomorrow. But as is always the case with these high-flying assets, there’s more to the story.
Let’s dive into some of the key drivers affecting demand for these three top cryptos today.
Following the post-Trump election victory, which saw Bitcoin rise to new all-time highs, and other top tokens like Ethereum and Dogecoin also see their fair share of upside, the performance of these top three cryptocurrencies has been overtly negative since Inauguration Day.
Some of this depressed sentiment can be tied to spot ETF inflows into Bitcoin and Ethereum. Among the notable reports I’ve seen come through is one detailing the surge of capital into gold-denominated ETFs and assets, with ETF outflows from various Bitcoin ETFs presumably flowing into these safe-haven funds.
One of the key investing theses held by long-term Bitcoin bulls (and to a certain extent, Ethereum holders as well) is that these digital assets carry some “store of value” properties that should provide demand even in the worst market environments. In fairness, we’ve yet to see how any cryptocurrency performs in a prolonged bear market (Bitcoin is the world’s first cryptocurrency, created in 2009 following the GFC).
That said, the fact that spot Bitcoin ETFs have given up their lead over gold ETFs (which was first gained late last year following the Trump election victory) is a trend worth noting. If more capital continues to flow out of this space, spot Ethereum ETFs (and future potential spot ETFs for Dogecoin and other assets) may have a much more negative outlook. Indeed, the recent news that two Bitcoin and Ether futures ETFs are being liquidated by 21Shares adds to this narrative.
I think the price action of all three major tokens today, and for the better part of the past two months, is really indicative of how investors view cryptocurrencies as an asset class in a potential recession. Right now, market participants are increasingly attempting to price new recession probabilities into their models. For top cryptos like these, their performance in a protracted downturn is really not known. That’s adding to the uncertainty around owning these assets heading into what could be a turbulent back half of 2025.
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