The cryptocurrency market experienced severe turbulence as Bitcoin's price plummeted to its lowest level in roughly a year, starkly contrasting with a resilient U.S. stock market. Bitcoin fell below $65,000, extending a broader downtrend, and later experienced extreme volatility, swinging from a low of $60,033 to a high of $65,926 within hours. This 13% single-day drop on Thursday marked Bitcoin's steepest decline since November 2022.
The divergence from traditional markets became pronounced. While Bitcoin sold off, the S&P 500 climbed to $6,976, driven by strong corporate earnings. Analysts expect S&P 500 companies to deliver close to 11% earnings growth for the December quarter, with over 80% of reporting firms exceeding expectations. This earnings-driven rally, led by AI-linked technology and semiconductor stocks, has shifted focus away from valuation expansion, softening concerns of an AI-driven bubble.
The crypto sell-off triggered massive liquidations. Approximately $700 million in leveraged crypto positions were wiped out over a four-hour period, including about $530 million in long positions and $170 million in shorts. The volatility spilled into related companies, with Michael Saylor's MicroStrategy reporting a staggering $12.4 billion fourth-quarter net loss driven by mark-to-market declines in its Bitcoin holdings.
Market analysts point to a capital rotation toward traditional equities offering visible earnings growth, fading crypto momentum, and reduced speculative appetite as key drivers. The $60,000 level acted as a critical psychological support, but sentiment remains fragile. The broader risk-off tone extended briefly to stock futures, with S&P 500 and Nasdaq 100 futures dipping slightly as Amazon shares plunged over 10% after-hours on weak earnings, though major indices like the Dow Jones remained positive year-to-date.
