Bitcoin falls below $80,000 as liquidity concerns deepen

The world’s largest cryptocurrency slid more than 6% to trade around $78,700 during U.S. trading hours, marking its lowest level since late November. The latest drop underscores renewed risk aversion across digital assets, as investors reassess exposure to speculative markets.

Friday’s selloff accelerated after former Federal Reserve Governor Kevin Warsh was nominated to lead the U.S. central bank, a development that lifted the U.S. dollar and weighed on alternative assets, including cryptocurrencies.

Liquidity fears pressure crypto markets

Market participants have grown increasingly cautious amid expectations that a Warsh-led Federal Reserve could pursue a tighter liquidity stance, including reducing the central bank’s balance sheet. Cryptocurrencies have historically benefited from abundant liquidity, often rallying during periods of aggressive monetary easing.

Analysts warned that reduced liquidity could continue to weigh on risk-sensitive assets. Sharp price moves, they added, may also fuel additional selling as investors become more aware of downside risks.

Broader digital assets extend losses

Elsewhere, Ether posted steep losses, falling nearly 12% to trade near $2,390, highlighting the broader weakness across the cryptocurrency market. Digital assets have struggled to regain momentum after last year’s selloff, lagging behind strong gains in gold and global equities.

Despite earlier optimism surrounding a more supportive regulatory environment, Bitcoin falls below $80,000 has now lost nearly one-third of its value since reaching record highs in October, reflecting the market’s sensitivity to shifts in liquidity and monetary policy expectations.