Bitcoin has experienced a significant decline, dropping below $90,000 for the first time since mid-November, as the cryptocurrency market faces intensified selling pressure. This downturn is attributed to various economic concerns, tariffs implemented by President Donald Trump, and ongoing challenges within the crypto sector. As of 7:51 a.m. New York time on Tuesday, Bitcoin’s value plummeted by as much as 7.6%, trading around $89,042. Other prominent cryptocurrencies, such as Ether, XRP, and Solana, also faced notable losses, leading to the most substantial four-day decrease in the digital asset index since August.
What’s Behind Bitcoin’s Drop Following Trump’s Election Rally?
Following Trump’s election victory in November, Bitcoin initially experienced a surge in value; however, since his inauguration in January, it has seen a decline of approximately 20%. Analysts attribute this drop to increasing uncertainty surrounding Trump’s trade tariffs and geopolitical tensions, which have undermined investor confidence. Adrian Przelozny, CEO of the crypto exchange Independent Reserve, commented, "The decline in Bitcoin prices is likely tied to broader macroeconomic uncertainty that has affected many financial markets in recent days, correlating with the various tariffs announced by President Trump."
Are Other Markets Feeling the Pressure?
The downturn in Bitcoin reflects a broader trend of investors steering away from riskier assets amid global economic slowdowns. The Nasdaq 100 has recorded its most significant three-day drop in two months, prompting a shift towards safer investments like bonds, which have seen the 10-year Treasury yield decrease for five consecutive sessions. Exchange-traded funds (ETFs), which significantly contributed to Bitcoin’s rise post-election, are now experiencing large outflows. On Monday alone, the iShares Bitcoin Trust ETF (IBIT) faced an unusual outflow of $158 million, while the Fidelity Wise Origin Bitcoin Fund saw $250 million withdrawn. Overall, Bitcoin ETFs listed in the U.S. lost over $956 million in February, marking a record low for the category, according to data from Bloomberg Intelligence.
What Volume of Crypto Has Been Liquidated?
The recent selloff has led to substantial liquidations in the crypto derivatives market. Data from CoinGlass indicates that more than $1.34 billion in bullish crypto positions were eliminated within just 24 hours, exacerbating the market’s decline.
Did the Bybit Hack Influence Crypto Sentiment?
An important factor contributing to the ongoing decline in the crypto market is the recent security breach at Bybit, one of the largest cryptocurrency exchanges globally. Hackers, reportedly linked to North Korea, stole around $1.5 billion in Ether last week and have begun laundering the stolen assets. This incident has raised alarms about the security of digital asset exchanges, reminding investors of previous hacks and scams that led to significant market downturns.
Are Memecoins Contributing to Market Concerns?
Recent issues surrounding memecoins have further undermined market confidence. Cryptocurrencies associated with Donald Trump and his wife Melania have seen poor performance, with the Trump token plummeting over 80% from its peak, according to CoinGecko data. Caroline Mauron, co-founder of Orbit Markets, remarked, "The Bybit hack is just the latest in a series of events, including dubious memecoin launches, that have revived unpleasant memories for participants in the crypto market."
What Lies Ahead for Bitcoin and the Crypto Market?
Given the prevailing macroeconomic uncertainties, diminishing investor confidence, and specific setbacks within the industry, the future of Bitcoin remains unpredictable. Analysts warn that further losses could occur if economic conditions do not stabilize and regulatory concerns continue to loom. Currently, traders and investors are keenly observing forthcoming developments, including U.S. economic policies and potential regulatory actions, to assess the future trajectory of Bitcoin and the wider cryptocurrency market.
FAQs:
Why is Bitcoin falling below $90,000?
The decline in Bitcoin’s value is largely due to Trump’s trade tariffs, significant outflows from ETFs, and recent security breaches in the cryptocurrency sector.
How much has Bitcoin lost since Trump’s inauguration?
Since Trump took office in January, Bitcoin has experienced a drop of nearly 20%, driven by economic uncertainty and market volatility.
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