Bitcoin fell to $63,000 as leverage unwound and the digital gold thesis faced its hardest test yet. Geopolitical chaos lifted real gold while BTC sold off with tech stocks.
Bitcoin Hits $63K: Digital Gold Thesis Under Pressure
Bitcoin dropped to approximately $63,000 Thursday, marking one of its sharpest single-day declines since the FTX collapse in November 2022. The move erased the entire post-election rally and left Bitcoin down roughly 50% from its October 2025 peak near $126,000. But the price action itself isn't the most interesting part—it's what happened around it.
This selloff occurred during a period of genuine macro uncertainty. President Trump threatened military action against Iran, tariff wars escalated with Canada and Europe, tech earnings disappointed, and traditional safe havens like gold surged. In theory, this should have been Bitcoin's moment. The "digital gold" narrative that attracted institutional capital over the past two years depends on Bitcoin behaving as a hedge during exactly these kinds of conditions.
Instead, Bitcoin sold off alongside software stocks while gold rallied 68% over the past year. That performance divergence undermines the fundamental thesis many ETF buyers and corporate treasuries used to justify Bitcoin allocation. When the asset you positioned as uncorrelated protection moves in lockstep with risk assets during stress, the value proposition changes.
The mechanics behind Thursday's crash reveal structural fragility beyond directional selling. More than $2 billion in long and short cryptocurrency positions liquidated this week as leverage flushed out of the system. U.S. spot Bitcoin ETFs, which absorbed 46,000 BTC this time last year, have turned into net sellers in 2026 according to CryptoQuant. Institutional demand that carried the 2024-2025 rally has reversed materially.
CryptoQuant also noted that Bitcoin broke below its 365-day moving average for the first time since March 2022 and declined 23% in the 83 days following that breakdown—worse than the early 2022 bear phase. The average Bitcoin holder is now underwater on their position, a psychological threshold that often precedes extended consolidation or further downside.
Multiple analysts flagged the $58,000-$60,000 range as critical support, aligning with Bitcoin's realized price—the average cost basis of all holders. If that level fails to hold, the decline could accelerate toward ranges that would stress corporate balance sheets heavily exposed to Bitcoin and potentially trigger forced selling from overleveraged positions.
What's unclear is whether this represents healthy deleveraging that sets up a base, or the early stages of a deeper cycle reset. Bitwise's Matt Hougan called this a "full-bore crypto winter" driven by excess leverage and profit-taking from early investors. Prediction markets now assign an 82% probability Bitcoin trades below $65,000 by year-end, a dramatic shift from expectations at the start of 2026.
The next few weeks will clarify whether institutional buyers view this as accumulation opportunity or whether the thesis itself needs reevaluation. If Bitcoin can't perform as a hedge when conditions call for one, its role in portfolios becomes purely speculative upside rather than strategic diversification.