Bitcoin approached the key $70,000 level on Thursday, as losses in the world’s largest cryptocurrency showed no signs of slowing, reflecting fragile investor sentiment in digital assets.

The cryptocurrency fell more than 3% in the Asian session to $70,052.38, marking its lowest level since November 2024 and sparking concerns among cryptocurrency traders worldwide.

Ether, the world’s second-largest cryptocurrency, declined nearly 2% to $2,086.11, with a drop below $2,000 marking a level not reached since May of last year.

Analysts attributed the latest rout to the nomination of Kevin Warsh as the next Federal Reserve Chair, with expectations he could shrink the Fed’s balance sheet.

Bitcoin has already lost over 7% this week, taking its total losses for the year to nearly 20%, while ether is down close to 30% this year.

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Cryptocurrencies have historically benefited from a large Federal Reserve balance sheet, which provided liquidity and supported speculative assets like bitcoin and ether in past market cycles.

Manuel Villegas Franceschi, from Julius Baer, said a smaller balance sheet “is not going to provide any tailwinds for crypto,” reinforcing investor concerns over future digital asset growth.

Institutional withdrawals have also intensified the sell-off, with U.S. spot bitcoin ETFs witnessing outflows exceeding $3 billion in January, following similar withdrawals in previous months.

Deutsche Bank analysts said that outflows totaled around $2 billion and $7 billion in December and November, highlighting that institutional investors are reducing exposure to cryptocurrency markets.

“These steady sales indicate that traditional investors are losing interest, and overall pessimism about crypto is growing,” Deutsche Bank analysts added, underlining fragile sentiment among digital asset traders.