Bitcoin plunges below $80,000, is its ‘digital gold’ status at risk? [Crypto Briefing]

[Financial News] Bitcoin (BTC) has broken below the psychological support level of USD 80,000 and plunged toward the USD 75,000 range. The Federal Reserve System (the Fed)’s tilt toward quantitative tightening and delays in U.S. crypto regulation bills have weighed heavily on investor sentiment.
According to Investing.com on the 2nd, BTC traded around USD 75,000 during the day, falling more than 4% from the previous session. That represents a drop of over 20% from the mid-month peak last month near USD 97,000. At one point, volatility pushed prices close to the short-term low around USD 74,000 seen in April last year.
The immediate trigger for the latest slide was the nomination of Kevin Warsh as the new chair candidate for the Federal Reserve System (Fed). Warsh is viewed as favoring quantitative tightening (QT) at the Fed even as policy rates are cut. This stance has been cited as undermining expectations for ample liquidity, a key driver of risk appetite in crypto markets.
Hong Sung-uk, a researcher at NH Investment & Securities, said, "Kevin Warsh believes the Fed’s balance sheet should be reduced," adding, "Policy rate cuts are likely to proceed as expected, but a shrinking Fed balance sheet is negative for Bitcoin, where liquidity is a crucial driver of investor sentiment." He went on to note, "Expansion of the Fed’s assets through quantitative easing and the resulting debasement (currency dilution effect) have been core investment theses for Bitcoin, and expectations for that are fading."
Some in the industry also argue that if the relatively Bitcoin-friendly Warsh pursues "reasonable monetary policy" to restore confidence in the United States dollar (USD), demand for BTC as an alternative asset and hedge could be partially eroded. Analysts note that in the recent risk-off phase, hedge demand has shifted away from BTC toward physical assets such as gold and silver, reinforcing this view.
Investor sentiment has also been dampened by delays in Senate review of the Digital Asset Market Clarity Act of 2025, which is intended to clarify the U.S. regulatory framework for digital assets. Coordination has stalled as parts of the industry, including Coinbase, oppose proposed rules on Decentralized Finance (DeFi) and restrictions on interest payments on Stablecoin holdings.
Growing doubts about the U.S. administration’s ability to advance policy have led many to conclude that the momentum toward institutionalization that followed approval of the Bitcoin Spot Exchange-Traded Fund (Bitcoin Spot ETF) has temporarily faded. Supporting this view, major U.S. Bitcoin Spot ETF products saw net outflows of about USD 1.43 billion last month, marking three consecutive months of capital leaving the space.
On the supply-and-demand side, growing doubts about the capacity of Digital Asset Treasury (DAT) firms such as MicroStrategy to continue large-scale purchases have become another source of concern. Since the start of the year, Morgan Stanley Capital International (MSCI) has been reviewing the inclusion and exclusion of DAT companies in the MSCI Index, which analysts say has triggered disappointment-driven selling.
Even so, experts point to several reasons for optimism, including the Trump administration’s continued stance of recognizing Bitcoin as a strategic asset and the possibility that discussions on the Digital Asset Market Clarity Act of 2025 could resume in the first half of the year. Kim Hyun-jung, a researcher at KIWOOM Securities, said, "The resumption of debate on the Digital Asset Market Clarity Act of 2025 in the U.S. Senate is meaningful in that it signals the start of negotiations among the crypto industry, the government, and traditional financial institutions."
elikim@fnnews.com Kim Mi-hee Reporter