What’s Driving Bitcoin’s Slump?

They’re calling it the whodunit of the century.

It’s no secret bitcoin has been having a rough go of it lately, particularly as the digital currency reaches its fourth straight month of selloffs, sitting below $70,000 a coin for the past two weeks. Now, nearly half of the bitcoin currently in circulation is worth less than what its holders paid for it. But who is to blame? While universities are largely holding on, some hedge funds have revamped their entire positions, selling tens of millions of shares in the iShares Bitcoin Trust ETF (IBIT) and other spot bitcoin products. But for most investors, the value of a crypto strategy remains the same.

“Right now, people obviously are a bit more cautious, but when it comes to interest and just talking about the topic, we’ve seen a lot of traction,” said Adrian Fritz, chief investment strategist at 21shares. “On the regulatory side, [there’s been] a lot of improvement. All of these things lay the groundwork for bigger allocators and bigger institutions to come in.”

A Rocky Start

Despite bitcoin’s volatile start to the year, IBIT remains Harvard University’s largest position, making up more than 12% of its overall portfolio, although it sold more than 20% in the fourth quarter. Brown and Emory universities also hold significant amounts of the coin via IBIT and Grayscale’s Bitcoin Trust (GBTC), respectively. Some hedge funds, however, have slashed their positions, according to recent 13F filings. The hedge fund Brevan Howard reduced its IBIT shares from a peak of 36.7 million to just 5.5 million, according to data compiled by CF Benchmarks. And they’re not alone. According to the same data:

• The hedge fund DE Shaw reduced its IBIT shares from 9.7 million a year ago to 4.7 million at the end of 2025.
• Schonfeld Strategic Advisors went from having 5.5 million shares in Fidelity’s Wise Origin Bitcoin Fund (FBTC) to 2.3 million over the past two quarters.
• Sculptor Capital dropped from 2.2 million to 224,000 shares in FBTC, also over the past two quarters.

The Long Game. The differences reflect overall strategies rather than emotional buying and selling, said Gregory Guenther, a financial planner with GRANTvest Financial Group. The hedge fund-driven selloffs point to the differing strategies, between institutional and retail investors, since the former have largely been driving the decline. 

“Institutional investors generally view bitcoin as a volatile satellite allocation inside a diversified portfolio, not as a core holding,” Guenther said. “When prices fall sharply, exposure often declines automatically because of internal risk controls, volatility targets or rebalancing rules… Institutions are not reacting emotionally to headlines and sudden price movements.”

Still, not everyone is spooked. The Emirate of Abu Dhabi actually increased its IBIT position last quarter, according to Bloomberg.