Bitcoin Plummages into Bear Market, Dropping Below $73K, Reversing All Gains Since Trump's Victory

[Para 1: The Lead] Bitcoin has plunged into bear territory, breaking below $73,000, reversing all gains since President Trump's victory. A surge of forced liquidations over the weekend, exacerbated by mounting short selling and heightened macroeconomic uncertainties, has deepened the sell-off. As of publication, Bitcoin is down 2.7% to $76,480, marking its lowest level since early November 2024. [Para 2-3: Supporting details & Context] VanEck's cryptocurrency expert and product manager, Menno Martens, stated, "This is just another cycle moment." He confirmed, "This is undoubtedly a bear market. The connection between geopolitical events and the cryptocurrency market is becoming increasingly profound, especially concerning U.S. dynamics. From a macroeconomic and geopolitical perspective, the impact is becoming more pronounced." Martens added, "The patterns of bull and bear cycles have not been fully replicated, and the primary reason is these new influencing factors. However, overall, this remains a bear market, and our outlook has not changed. We always view from a long-term perspective." The weekend's sharp decline in cryptocurrencies was driven by excessive leverage positions, leading to large-scale forced liquidations, reflecting speculative positions accumulated during last year's rally. Derivatives tracking data shows billions of dollars in cryptocurrency bets were liquidated in a short time, with long positions dominating. Additionally, market liquidity concerns have amplified price volatility, making relatively small price movements trigger large-scale liquidations. Investor sentiment is also affected by overall economic uncertainty, as the market evaluates Kevin Warsh's nomination as the next U.S. Federal Reserve (Fed) chair for potential impacts on future interest rates. The market generally perceives Warsh as leaning hawkish, raising concerns about a potentially longer period of tight financial conditions. Meanwhile, the U.S. Bureau of Labor Statistics announced that due to partial government shutdowns, the highly anticipated January employment report was delayed. Further, reports indicate significant disagreements between the cryptocurrency industry and large U.S. banks regarding the regulation of stablecoin yields, highlighting legislative hurdles for long-term stagnation in the cryptocurrency sector. A meeting in the White House saw discussions on market structure regulations, but there was little progress on whether stablecoin issuers can offer yield-based returns. Banks argue that yield-based stablecoins could accelerate deposit outflows and pose risks to financial stability. Cryptocurrency industry players believe such mechanisms are crucial for industry growth and competitiveness.