Dip buyers have vanished: Bitcoin falls 40% from peak, its biggest support suddenly missing

Bitcoin has fallen more than 40% from its recent peak, erasing hundreds of billions of dollars in value and shaking confidence among retail traders. Yet the deeper concern may not be the drawdown itself, but what it reveals. The usual cycle - dip buyers returning, fresh narratives forming, momentum rebuilding - has not materialised this time.

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Dip buyers have vanished, and the forces that would normally fuel a rebound are now working against it, Bloomberg reported on Saturday, adding that Gold is winning the macro-hedge argument. 

"The central story of Bitcoin was 'number go up' and we don't have that anymore," Owen Lamont, portfolio manager at Acadian Asset Management, was quoted as saying. "We have number go down. That is not a good story."

Unlike equities or commodities, Bitcoin lacks conventional fundamentals and its value rests largely on belief - narratives that convince new buyers to enter the market. Those narratives are now being tested and retail investors who rode the recent rally are underwater, the report said. 

Meanwhile, new speculative venues are drawing attention away from crypto. "New speculative venues such as prediction markets - and commodities exchanges! - are siphoning away attention from crypto markets," said Noelle Acheson, author of the Crypto is Macro Now newsletter. "Now that BTC is a 'macro asset,' it has to compete with so many other alternatives, most of which are easier to understand and easier to explain to trustees, clients, your board, etc."

At the same time, stablecoins have emerged as a dominant force in payments and regulatory discussions in Washington. Even some of Bitcoin's longtime corporate backers have shifted focus. "If anything, stablecoin activity could be correlated with activity on Ethereum or on other chains. And stablecoins are for payments," said Carlos Domingo, co-founder and CEO of Securitize. "I don't think anybody today sees Bitcoin as a payment mechanism."

The report further points to what it calls a "financialisation trap." The expansion of exchange-traded funds and institutional trading infrastructure was meant to legitimise Bitcoin. Instead, it has made it resemble other Wall Street instruments - widely accessible, heavily traded, and tied to derivatives markets.

That linkage has created vulnerabilities. Offshore derivatives platforms offering high leverage can trigger automated liquidations that cascade into sharp price falls, affecting even spot ETF holders.

The macro narrative has also weakened. Despite geopolitical tensions and dollar weakness, gold and silver have rallied while crypto prices have slid. 

US-listed gold ETFs drew more than $16 billion in the past three months, while spot Bitcoin ETFs saw roughly $3.3 billion in outflows, according to Bloomberg-compiled data. Bitcoin's market capitalisation has shrunk by more than $1 trillion.

"People are realising that Bitcoin is what it's always been - which is simply a speculative asset," said Tom Essaye, president of Sevens Report. "Bitcoin is not replacing gold; it's not digital gold; it doesn't do the same thing, it doesn't give people the same utility that gold does. It's not an inflation hedge - there are other better hedges, frankly, where you don’t have to worry about the volatility. And it's not a chaos hedge either."

Speculative culture is evolving too. Platforms such as Polymarket and Kalshi are attracting traders who once gravitated toward meme coins. "The prediction markets are becoming the next craze for the same DIY investors who enjoy the speculative nature of crypto," said Roxanna Islam of TMX VettaFi. "That could mean less overall interest in crypto."