The token has retreated about 6 percent so far in May, whereas Bloomberg gauges of global stocks, bonds and commodities have posted steadier performance while gold has jumped toward a record high.

Bitcoin’s recent travails contrast with a 72 percent rally last quarter that left traditional investments in the shade and stirred talk of a new bull phase for the largest digital asset after 2022’s crypto rout.

The spotlight lately fell on sector-specific risks including a traffic jam of transactions on the Bitcoin blockchain, thinner liquidity in digital-asset markets and an ongoing regulatory crackdown in the US.

“We’re in a challenging period now,” Bitwise Asset Management Chief Investment Officer Matt Hougan said on Bloomberg Television. “We’ll eventually exit this period with new rules, with clearer regulations and that will contribute to a multi-year bull market”, he said.

Bitcoin shed as much as 1.9 percent on Thursday and was trading near $27,470 as of 11:45 a.m. in Singapore. Tokens like Ether and Solana also declined.

A recent flurry of activity on the Bitcoin network involving meme tokens such as Pepe ended up pressuring the top cryptocurrency by causing a spike in congestion and transaction fees on the blockchain.

The jump in cost led crypto exchange Binance to temporarily halt Bitcoin withdrawals twice on Sunday, weighing on sentiment.

“Investors may be concerned about the reliability and scalability of the Bitcoin network,” said Stefan von Haenisch, head of sales trading at OSL SG Pte in Singapore. “It’s important to note that these issues are not necessarily indicative of a vulnerability in the blockchain itself, but rather in the way it’s being used and maintained.”

Blockchain data show over 300,000 pending transactions on the Bitcoin network. The mean fee per transaction was at $14 on Wednesday from 60 US cents at the start of 2023, according to CryptoQuant. Both metrics are off their peaks but still elevated.

Outside of highly speculative meme tokens, wider liquidity is at risk in the wake of crypto blowups like FTX and the tougher US stance.

For instance, top market-making firms Jane Street Group and Jump Crypto are pulling back from trading digital assets in the US, while Jane Street is also scaling back its crypto ambitions globally.

Figures from CCData indicate that spot trading volume on Binance, the largest digital-asset exchange, slid 48 percent to $287 billion in April — the second-lowest monthly trading volume since 2021.

Bitcoin’s year-to-date jump has ebbed to 66 percent from 84 percent in mid-April. The token has lost about $41,000 since its pandemic-era all-time high of nearly $69,000 in November 2021.