Bitcoin entered 2025 with massive expectations. Analysts predicted aggressive growth fueled by spot ETF demand, institutional buying, and the post-halving cycle. Instead, Bitcoin is stumbling. Recent data shows that Bitcoin, the world’s most well-known digital asset, is now performing worse than US Treasuries, which are considered the safest investment available. For a market built on high-risk and high-reward momentum, this shift is raising eyebrows.

US Treasuries are backed by the United States government, making them one of the least risky assets. When Bitcoin lags behind Treasuries, it signals that investors are pulling back from risk and choosing security over potential gains. Bitcoin is currently up only about 8% this year, which is unusually low for an asset known for explosive growth during bull cycles.

A Drop Below 100,000 Turns Sentiment Negative

For most of the year, Bitcoin comfortably stayed ahead of Treasury performance. That confidence vanished when Bitcoin slipped and briefly fell below the 100,000 mark earlier this week. The sudden decline erased a meaningful portion of its yearly gains and shifted the tone of the market from hopeful to defensive.

Investors are now questioning whether Bitcoin can maintain its momentum. With volatility increasing and liquidity thinning, traders are choosing to step back rather than double down.

Retail Traders Hit Emotional Breaking Point

Matt Hougan, Chief Investment Officer at Bitwise, described the current mood as “max desperation.” Retail traders are drained from repeated drops and fading confidence. Many had entered the market expecting strong returns following ETF approvals. Instead, the market is dealing with selling pressure and large swings.

However, Hougan remains optimistic. He does not believe this marks the beginning of another extended crypto winter. Instead, he sees the panic as a natural reaction during transitional phases of a market cycle. Historically, periods of extreme fear often precede strong recoveries in crypto.

ETFs Provide a Critical Support Threshold

Bitcoin ETFs saw a significant $578 million in outflows on Tuesday. When institutions pull capital, the market reacts immediately. An interesting detail is emerging from on-chain data. The average cost basis for spot Bitcoin ETFs sits near 89,600. This level is becoming a line in the sand. If Bitcoin stays above it, institutional buyers remain in profit, reducing the risk of a deeper sell-off.

Bitcoin is now fighting more than price volatility. It is battling a shift in investor psychology. Treasuries are winning the confidence game, and Bitcoin will need a strong rebound to pull investors back into risk.

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