Bitcoin reached its all-time high on October 6, 2025, when its price briefly surged to US$126,210 (HK$984,438), bringing its total market capitalization to as much as US$2.5 trillion. However, circumstances have since changed dramatically. Last week, bitcoin briefly fell to around US$60,000, representing a cumulative decline of more than 50 percent. What accounts for this sharp reversal?
In fact, during the first nine months of 2025, bitcoin was widely regarded as an investment “myth” that investors believed in – especially after United States President Donald Trump took office. His administration had been actively promoting the development of the cryptocurrency market, which helped sustain bitcoin’s upward momentum. At the time, many analysts were convinced that bitcoin would soon break through the US$220,000 threshold.
Yet, just as Trump helped fuel its rise, his administration also played a role in its sharp decline. One week after bitcoin hit its record high on October 6, the US Department of Justice announced the seizure of 127,271 bitcoins belonging to Chen Zhi, citing allegations related to forced labor, human trafficking, and fraud.
At the time, those bitcoins were worth approximately US$15 billion. The case shocked the world and led many to question bitcoin’s claims of decentralization and anonymity.
Indeed, one of bitcoin’s key selling points had long been its “pseudonymous” nature. However, Chen Zhi’s case made it clear that true anonymity does not exist in practice. Nearly all major exchanges – such as Binance and Coinbase – as well as the increasingly popular bitcoin exchange-traded funds require strict compliance with Know Your Customer regulations imposed by national authorities. As a result, most bitcoin transactions are effectively traceable, which explains why the US government was able to seize more than 120,000 bitcoins with relative ease.
Because bitcoin has effectively lost what many considered its defining feature, a significant number of investors who had believed in its anonymity have become wary of the asset. This shift in sentiment has been a major factor behind bitcoin’s steady decline since mid-October last year. Even though bitcoin appears to have found initial support around US$60,000 and staged a rebound, it is likely that it has not yet reached a bottom. There remains a real possibility that it could fall toward US$50,000 after any short-term recovery.
It is important to note that bitcoin’s market value has already evaporated by more than US$1 trillion. The ripple effects of such a massive loss of wealth across financial markets should not be underestimated.
Andrew Wong is a veteran independent commentator
