Bitcoin News Today: Bitcoin Loses 23% Since 2025 Start Amid Liquidity Drop and Risk Aversion

Bitcoin is undergoing a recalibration amid a sharp decline in liquidity and a growing wave of caution among traders and investors. The digital asset has lost approximately 23% of its value since the beginning of 2025 and an additional 15% over the past 30 days, bringing its price to around $82,800 as of the latest data [1]. This downturn is not only a reflection of declining price but also of a broader shift in market dynamics, as the reduced liquidity exacerbates price volatility and diminishes the willingness of market participants to take on risk.

The decline is mirrored in derivatives markets, where open interest in Bitcoin futures has dropped by 35%, or $57 billion, to $37 billion, as traders scale back leveraged positions [1]. Long positions have also seen a 33% drop in funding rates, suggesting a more conservative stance across the market. Meanwhile, implied volatility has fallen significantly to 16.3% in recent weeks, down from a peak of 23.8%. While reduced volatility can often signal a market in stabilization, in the crypto space it may also reflect uncertainty or the buildup to a potential bullish move [1].

On-chain data further supports the narrative of a cautious market. The demand for downside protection has risen, as evidenced by an increasing 25 delta put skew in options markets [1]. The Net Unrealized Profit/Loss (NUPL) indicator, as tracked by Glassnode, has also declined to 8.6%, indicating that traders are holding fewer profitable positions and adopting more defensive strategies [1].

The broader macroeconomic landscape has also contributed to the current environment. In July, hedge funds that relied on crowded trading strategies began to unwind positions, leading to a shift in momentum toward more systematic and stock-picking strategies [4]. This realignment points to a market recalibration influenced by evolving risk perceptions and capital flows.

Regulatory developments have also played a part. JPMorgan’s Q2 2025 earnings call highlighted the potential for a more streamlined regulatory framework that could address liquidity and capital constraints, offering clarity to the crypto market [5]. Such developments may eventually restore confidence among institutional investors, who are currently exercising caution.

In the absence of major macroeconomic shocks, the focus remains on liquidity conditions and investor sentiment. Analysts have suggested that the current pullback is more of a temporary realignment than a structural breakdown [1]. On-chain metrics indicate that the drop is largely driven by shifting risk appetites rather than any fundamental deterioration in the asset’s underlying value.

The market is now closely watching for signs of stabilization, particularly in terms of volume and volatility. While the sharp correction has raised concerns, technical indicators suggest that Bitcoin may be approaching oversold levels, potentially limiting further downside in the short term [1].

Amid the uncertainty, traditional investors remain on the sidelines, though some are showing interest in the potential of Bitcoin. For instance, speculative forecasts suggest that had Warren Buffett invested 5% of Berkshire Hathaway’s capital in Bitcoin at the start of 2025, the returns could have been substantial [2]. However, such projections highlight the high-risk nature of the asset and should be viewed with caution.

As the market continues to recalibrate, patience and selective positioning appear to be the dominant themes. Investors are likely to favor assets with stronger fundamentals and clearer use cases, while keeping a close eye on liquidity developments and macroeconomic signals for any signs of a turning point [1].