THE COLLAPSE in the price of Bitcoin (BTC) during 2026 — with BTC currently hovering around $67,000, having soared well over $120,000 last year — has raised serious question marks about the theory it is a safe-haven asset much like gold, which is currently back above $5,000 amid geopolitical uncertainty.
Apologists of Bitcoin often refer to it as a safe-haven asset, but the latest cycle, with the world’s leading cryptocurrency down circa 45% from its all-time high — a collapse of gargantuan proportions — has reinforced the view of sceptics that it is “a speculative asset”.
So which is it? According to Rachael Lucas, Crypto Analyst at BTC Markets, “recent performance shows Bitcoin behaved more like a high‑beta risk asset than a safe‑haven hedge”.
She continued: “Gold and silver strengthened during geopolitical and inflationary tensions, while BTC fell sharply, undermining short‑term comparisons to traditional hedges.
“Analysts noted Bitcoin failed to respond to typical safe‑haven triggers, with its price decline revealing its sensitivity to liquidity shocks rather than defensive demand.
“This doesn’t eliminate the long‑term hedge thesis but highlights that Bitcoin does not reliably mirror gold‑like behaviour during market stress.”
Speculative asset not safe haven
Scott Gallacher, Director at Leicester-based Rowley Turton, is one financial expert firmly in the ‘speculative asset’ rather than ‘safe-haven’ camp.
Gallacher says: “The recent fall in the Bitcoin price illustrates that, despite claims from its supporters, Bitcoin is far from being a safe-haven asset.
“While traditional safe havens such as gold and silver have risen sharply during the latest period of uncertainty, Bitcoin has moved in the opposite direction.
“Whether this marks the beginning of a more permanent decline or simply a temporary setback before new highs is impossible to say.
“However, for me, the recent falls reinforce the view that Bitcoin remains a speculative asset rather than an investment.”
Reasons for the Bitcoin crash
So why has Bitcoin fallen so sharply in 2026 to date? According to David Belle, Founder at trading platform, Fink Money, the crash was caused by a Hong Kong hedge fund making a margin call on bets that went wrong and being forced to sell Bitcoin to meet its obligations.
Lucas, meanwhile, says the fall has been “due to forced liquidations, Exchange-traded-fund (ETF) outflows and macro risk‑off sentiment”.
She continued: “Liquidations exceeded hundreds of millions of dollars as BTC broke key support, triggering a cascading sell‑off across derivatives markets. Outflows from spot Bitcoin ETFs added direct selling pressure during an already fragile liquidity period.
“High interest rates, inflation concerns and geopolitical tensions contributed to broader derisking, pushing investors out of speculative assets and deepening volatility across crypto markets.”
So is this the beginning of a long winter for Bitcoin? Lucas says analysts remain split: “Some frame the downturn as a severe, winter‑like correction driven by leverage wipeouts and weakening sentiment, like past multi‑month drawdowns.
“Others suggest this is a structural deleveraging phase rather than a true multi‑year winter, noting that forced selling, not fundamental weakness, amplified the decline.
“While conditions are more serious than a short‑term blip, evidence of base‑building and stabilisation after liquidation cascades indicates the market may not yet be entering an extended crypto winter.”
Brutal sell-off
More importantly, is now a time to buy Bitcoin or exit altogether?
If you believe in Bitcoin and the wider crypto narrative, Belle says it is very much the former: “The current sell-off of Bitcoin is brutal, that is not in doubt. But while it’s brutal now, the path for Bitcoin has always been similar to this, namely highly volatile but with big upside.
“There will be people in two years’ time probably kicking themselves that they didn’t buy at the current price.
“If you believe Bitcoin and cryptocurrencies more widely are the future, now could be a once-in-a-lifetime opportunity to buy in at a serious discount.”
Others disagree. Samuel Mather-Holgate, Managing Director at Swindon-based Mather and Murray Financial, a wealth management firm, said “the wheels have come off crypto”.
He continued: “It’s taken some time, but this could be the beginning of the end for mainstream holding of crypto. The genie is out of the bottle.
“While crypto will always have a place for nefarious transactions and areas where international transfers are next to impossible, crypto millionaires and significant portfolio holdings now look laughable.”
Lucas added: “Some analysts argue the drawdown appears technical rather than structural, creating a potential reset that long‑term investors might interpret as a buying window.
“Spot BTC ETFs recorded net inflows even after the crash, suggesting institutional investors treated the event as a dip worth accumulating. However, continued macro uncertainty and volatility mean any entry should be cautious and long‑term focused.
“Viewing the sell‑off as a temporary dislocation rather than fundamental failure may support the argument for selective buying during weakness.”
What lies ahead?
So what lies ahead for Bitcoin in 2026? According to Lucas: “Forecasts vary, but current data suggests Bitcoin remains in a corrective phase with potential for recovery once liquidity improves.
“Analysts highlight that despite sharp declines, the network’s fundamentals remain intact and long‑term adoption drivers, such as ETFs and institutional flows, are still present beneath the volatility.
“Stabilisation after forced selling, combined with historical recovery patterns, suggests Bitcoin could end 2026 higher than current levels, though direction will depend heavily on Federal Reserve policy, ETF flow trends and broader risk appetite in global markets.”
