Bitcoin Drops 23%: Cryptocurrency Experiences Worst Q4 Since 2018

The cryptocurrency market just experienced a harsh final quarter of the year, reminding investors that crypto remains one of the most volatile asset classes in the world. Data from Coinglass shows that Bitcoin closed Q4 with a decline of -23.07%, far below the historical average for Q4 of +77.07% and the median of +47.73%. This is the second worst Q4 in BTC history, only behind the -42.16% crash in 2018 during the infamous “crypto winter” period. Ethereum also fared worse, dropping -28.28%, marking its fourth worst Q4. Notably, this result completely contradicts the typical bullish end-of-year pattern—often seen as the “harvest season” for the crypto market. Customs, Tight Liquidity, and Institutional Outflows The decline has wiped out most of the positive expectations for 2025—a year that once held much hope under a more crypto-friendly US administration. Despite a series of positive factors such as the GENIUS Act, spot ETFs for altcoins, and major banks opening access to digital assets, the market could not sustain its upward momentum. As a result, crypto became the worst-performing asset class of the year: Bitcoin down about -6%, Ethereum -12%, while many altcoins lost 40% or more. This stark contrast to traditional markets, where silver rose +130%, gold +65%, and the S&P 500 +16%, is notable. From “Santa Rally” to Panic Selling: Market Sentiment Reverses The plunge was driven by a convergence of unfavorable factors. Announcements of tariffs by President Trump triggered a strong liquidation wave, with about $19 billion wiped out in October alone, pushing the market into a “hidden bear market.” On a macro level, prolonged high interest rates and the Federal Reserve’s (Fed) delay in easing measures prevented liquidity from being injected. The quantitative tightening (QT) program ended but was not replaced with new capital, leaving the market without support. Major institutions began shifting towards safe assets like gold and stocks, ETF inflows into crypto slowed, and leverage was heavily “deleveraged.” The result was a shift to negative sentiment: overly risky positions from early in the year—especially memecoin surges and rug pulls—forced the market into a prolonged deleveraging phase. Even familiar seasonal models like the “Santa rally” failed, indicating exhaustion of capital flows. Long-Term Perspective: Maturity Behind Volatility Looking ahead to 2026, the outlook is not entirely bleak. The Fed is expected to accelerate easing, with plans to buy around $40 billion in T-bills each month, improving liquidity. Tax rebate proposals and pending crypto market legislation could attract institutional capital and promote broader acceptance. Data from early Q1/2026 shows a cautious start: BTC down slightly by -0.19%, while ETH up +0.4%. However, history repeatedly shows that market bottoms often form when confidence is at its lowest. After a saturated 2025—dominated by stories from AI, flash crashes, to tariff shocks—crypto is entering a “rebuilding” phase. While short-term volatility may continue, the long-term potential of the crypto market remains intact. For patient investors, this deep correction could lay the foundation for the next growth cycle. $ETH $BTC {spot}(BTCUSDT)