Bitcoin’s sharp repricing is no longer confined to crypto forums. The token dropped 12.6% in a single session to US$63,295 (NZ$106,339) on February 5, its steepest fall since November 2022. It now sits about 50% below October’s US$126,000 high.
Roughly US$2 trillion has been erased from total crypto valuations since October. In the past month alone, US$800 billion has disappeared. Leverage has amplified the move: US$1 billion in bitcoin positions were liquidated in 24 hours, and US$5 billion over five days. The Crypto Fear & Greed Index slid to 5 — deep in “extreme fear”.
President Trump’s nomination of Kevin Warsh as Federal Reserve Chair on January 30 sharpened expectations that balance sheet expansion is no longer a given, after the trigger came from Washington. Warsh resigned from the Fed Board in 2011 over his opposition to quantitative easing. The Fed’s balance sheet currently stands at US$6.6 trillion.
Manuel Villegas Franceschi, digital assets analyst at Julius Baer, said: “The market fears a hawk with him. A smaller balance sheet is not going to provide any tailwinds for crypto.”
Bitcoin’s post-2020 rally coincided with unprecedented liquidity. A policy turn towards contraction challenges the premise that monetary expansion would remain a permanent backdrop.
Spot bitcoin ETFs recorded US$7 billion in outflows in November, roughly US$2 billion in December, and more than US$3 billion in January — about US$12 billion withdrawn in three months.
US$817.9 million exited the funds on January 29 alone.
Deutsche Bank characterised the move as a “loss of conviction”. Investors are not forced sellers; they are reallocating.
Inland Revenue has identified 227,000 New Zealanders linked to approximately 7 million crypto transactions worth NZ$7.8 billion. Monthly turnover ranges between NZ$700 million and NZ$800 million.
“Despite popular thinking, people are not invisible on the blockchain,” said Trevor Jeffries of Inland Revenue.
The Crypto-Asset Reporting Framework will require exchanges to share customer data with tax authorities from April 1, 2026. Inland Revenue estimates the regime could raise NZ$50 million annually.
The compliance window is narrowing for firms that transacted through company accounts.
The estimated energy cost to mine one bitcoin in New Zealand is about NZ$173,193. Market value has traded between NZ$106,339 and roughly NZ$147,000 in recent sessions. More than 1,000 active miners operate domestically, many facing margins below zero.
Koura Wealth’s bitcoin fund — capped at 10% of a member’s balance — carries a product disclosure warning of a “50% loss every 1–2 years.” NZ Funds’ Growth Strategy maintains a 5% allocation first purchased at around US$10,000.
Global risk assets have softened alongside crypto. The S&P 500 fell 1.23%, the Nasdaq 1.59%, oil 5.3%. The NZX 50 slipped 0.17%. The New Zealand dollar trades at 60.15 US cents.
Analysts are divided. Stifel sees scope for US$38,000. Compass Point places a floor between US$60,000 and US$68,000. Deutsche Bank maintains it is a “loss of conviction, not a broken market.”
Liquidity is tightening. Reporting rules are hardening. For 227,000 New Zealanders, volatility now sits alongside visibility.