Bitcoin Slumps to Pre-2024 Levels Amid Widespread Portfolio Rebalancing

Bitcoin has plummeted to levels not seen since before Donald Trump's re-election in 2024, wiping out over $1 trillion in market value. The cryptocurrency tumbled from its peak of over $126,000 last autumn to just above $60,000, causing widespread portfolio rebalancing and renewed doubts about crypto's role as a hedge.

This decline has starkly contrasted with the initial optimism about a more crypto-friendly administration at the start of Trump's term. Bitcoin first crossed the $100,000 mark just a month after the elections, but sentiment has since shifted, with the cryptocurrency falling by almost 30% this year and over 6% since Trump took office.

Investors have been reassessing their positions or selling out entirely, as seen in the daily outflows from BlackRock's Bitcoin ETF. Analysts were considering the possibility of restoring Bitcoin's status as 'digital gold' or a hedge against uncertainty during the conflict with Iran in February, but since then, the cryptocurrency has given back those gains.

Regulatory signals are now being closely watched, particularly the CLARITY Act, which could outline regulatory frameworks and legitimize the industry. If enacted, it could serve as a stimulus for growing demand for cryptocurrencies and attracting investment into the space.