Bitcoin extended its sell-off for a second straight day on Wednesday, nearly touching the $72,000 level as the cryptocurrency’s recent retreat deepened. The world’s largest digital asset fell as low as $72,096.20, down more than 5% on the day, before slightly recovering to trade around $72,958.38, still roughly 4% lower. Bitcoin is now more than 40% below its record high of approximately $126,000 reached last October.

The decline follows Tuesday’s move below the $73,000 mark, which pushed bitcoin to its lowest level in nearly 16 months and brought it close to its pre-election price levels. Analysts have identified $70,000 as a critical support zone, warning that a sustained break below this level could signal a deeper downturn, according to a note from Citi.

Bitcoin’s weakness is being driven by a combination of geopolitical and macroeconomic pressures. Investors have recently rotated out of risk-on assets amid rising tensions between the United States and Europe, partly linked to President Donald Trump’s controversial Greenland proposal. A recently ended partial U.S. government shutdown has also delayed the release of key economic data, adding to market uncertainty.

Further weighing on sentiment are expectations of a potential shift in U.S. monetary policy following Trump’s nomination of Kevin Warsh as Federal Reserve chair. At the same time, momentum has slowed around efforts to establish clearer, more crypto-friendly regulatory and legislative frameworks in the U.S., dampening investor confidence.

Institutional selling has also played a major role in bitcoin’s decline. According to a Deutsche Bank analyst note, expectations of a deeper correction have led to large institutional outflows, thinning market liquidity and putting additional pressure on prices.

Spot bitcoin exchange-traded funds have experienced significant outflows following a wave of liquidations in highly leveraged crypto positions last October. The funds recorded more than $7 billion in outflows in November, about $2 billion in December, and over $3 billion in January, highlighting sustained institutional caution toward the asset.

The broader pullback in bitcoin has spilled over into crypto-related equities. Strategy, a bitcoin-focused treasury firm, fell around 5% on the day, while mining companies such as Riot Platforms and MARA Holdings plunged nearly 11%.