Why Bitcoin is struggling: 8 factors impacting crypto markets

Failed stories about blockchain adoption and weak fees have undermined confidence in major crypto projects.

The analysis, shared on February 3, 2026 by Post Fiat founder Alex Good, also known as ‘goodalexander’, comes at a time when digital asset markets are facing the most bearish social sentiment in months and Bitcoin has hit a nearly nine-month low.

Dissecting the current recession

The industry observer presented eight bearish factors for the current slump, with the main reason being the inability of the major blockchain integration stories to generate sustainable value.

Examples include Arbitrum’s brief rally over a Robinhood announcement that later resulted in the broker’s internal resolution and Nasdaq’s use of private blockchains for on-chain trading instead of public ones.

The analyst noted that actual fees for key layer 1 protocols have been low, with Solana’s daily fees falling to around $1 million after peaking above $24 million during the ‘Trump Coin’ frenzy.

Other factors include a macroeconomic focus on international equities, gold and AI, which has diverted attention from crypto. Good also suggested that the market has acted like a “Trump proxy,” performing well on pro-crypto policy expectations that have not fully materialized.

Additionally, the expert pointed to structural market pressure, suggesting that if discounts on digital asset trusts (DATs) widen, activist investors could be incentivized to sell the underlying tokens, creating more downward pressure.

You might also like:

Data supports this bearish view. According to market intelligence provider Santiment, “FUD has taken over social media” following Bitcoin’s 16% decline over the past week, with the company calling this the most negative retail sentiment since November 2025.

Investment flows also reflected the gloom, as data from CoinShares showed weekly outflows of $1.7 billion from digital asset investment products, while Bitcoin alone saw $1.32 billion disappear. Furthermore, the industry has lost $73 billion in assets under management since its peak in October 2025.

What could still support Crypto in the longer term?

Despite the sell-off, Good says there are still reasons for cautious optimism. He pointed to a more fragmented world order, rising debt and the risk of wealth taxes as factors that could revive interest in fixed assets.

He also argued that artificial intelligence could lead to higher unemployment rather than job creation, increasing pressure on central banks to ease policy, which has historically benefited scarce assets.

Other analysts have echoed the idea that the cycle is strained rather than broken. On February 2, Raoul Pal, founder of Global Macro Investor, said that Bitcoin’s decline reflects a liquidity drop in the US related to budgetary mechanisms and a government shutdown, and not a failed market structure. He argued that an easing of liquidity later in the year could change conditions, although near-term momentum remains weak.

However, as things stand now, traders will have to keep an eye on whether Bitcoin can maintain its stability around $70,000. According to market watchers like Daan Crypto Trades, a sustained move back above $80,000 could calm the markets, while another decline would likely test sentiment again.