The cryptocurrency market faced a turbulent session on February 25, 2025, as Bitcoin plunged to $87,630—its lowest level since November 2024. The sharp decline marked a 6.78% drop over 24 hours, dragging down the broader digital asset market and sparking concerns among traders and long-term investors alike.
This sudden downturn was not driven by a single factor but rather a confluence of macroeconomic developments, technical breakdowns, security breaches, and shifting institutional sentiment.
Bitcoin’s Technical Breakdown at Critical Levels
One of the earliest warning signs came from technical analysis. Bitcoin broke below a key chart pattern known as an ascending broadening wedge, a formation typically associated with bearish reversals. According to analysts at Matrixport, this breakout occurred during a period of unusually low trading volume, raising red flags about market depth and buyer interest.
“The likelihood of a deeper decline is increasing, particularly since this break is occurring during a period of low trading activity, which may result in limited demand to buy the dip.”
Low volume during breakdowns often signals weak market participation, meaning fewer buyers are stepping in to absorb sell pressure. This can lead to extended price drops as momentum traders amplify downward movement. With Bitcoin now trading below $88,000, support levels around $85,000 and $80,000 are now in focus for technical traders monitoring potential floor zones.
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Trump’s Tariff Announcement Sparks Broader Market Sell-Off
A major catalyst behind the sell-off was former President Donald Trump’s confirmation of new tariffs on Canadian and Mexican imports. Starting March 4, 2025, a 25% tariff will be imposed on all goods from both countries, along with an additional 10% levy on Canadian energy exports.
Trump stated on February 24:
“The tariffs are going forward on time, on schedule.”
Markets interpreted this as a sign of escalating trade tensions, reminiscent of the 2018–2019 U.S.-China trade war. The announcement triggered risk-off behavior across financial markets. The Nasdaq Composite fell 1.2%—its third consecutive daily loss—reflecting investor concern over inflationary pressures and supply chain disruptions.
This event underscores a growing trend: cryptocurrencies are no longer isolated from traditional finance. Once considered a decentralized alternative immune to geopolitical shocks, Bitcoin and other digital assets now often move in tandem with equities, especially tech stocks. When macro fears rise, crypto tends to fall alongside them.
Bybit Security Breach Shakes Investor Confidence
Compounding the market stress was a major hack at Bybit, one of the largest cryptocurrency exchanges headquartered in Dubai. Attackers exploited a vulnerability to siphon off approximately $1.5 billion in digital assets, marking one of the biggest exchange heists in recent years.
While the exact method remains under investigation, early reports suggest involvement from state-linked hacking groups known for targeting crypto infrastructure. High-profile security failures like this erode trust across the ecosystem. Retail and institutional investors alike may pause or reduce exposure after such events, fearing similar vulnerabilities elsewhere.
Security remains a top concern in decentralized finance (DeFi) and centralized platforms alike. Even if only one exchange is compromised, the ripple effect impacts confidence in the entire market.
Bitcoin ETFs See Continued Outflows
Institutional sentiment has turned cautious. U.S. spot Bitcoin ETFs recorded **over $500 million in net outflows** for two weeks in a row leading up to February 21, 2025. This marks a reversal from earlier bullish inflows that helped propel prices above $100,000 in late 2024.
Key outflow contributors included:
- Grayscale’s GBTC: -$60.08 million
- Bitwise’s BITB: -$16.58 million
- Fidelity’s FBTC: -$12.47 million
These figures highlight a shift in institutional strategy. After the initial post-election rally fueled by expectations of crypto-friendly policies under the new administration, institutions are now reassessing risk amid macro uncertainty and weakening technicals.
ETF flows are closely watched indicators of professional investor behavior. Sustained outflows suggest that large players may be de-risking portfolios ahead of potential volatility.
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Altcoins Hit Harder Than Bitcoin
While Bitcoin bore the brunt of the initial decline, altcoins experienced even steeper losses:
- Ethereum (ETH) dropped to $2,375, breaking below its key support range of $2,600–$2,800.
- Solana (SOL) plunged 14.85% to $143.13.
- XRP fell 10.85% to $2.30.
- Cardano (ADA) lost 10.96%, trading at $0.6859.
- BNB declined 6.55% to $615.13.
Analysts at Spot On Chain warned that Ethereum could be on track for its worst February performance ever if prices remain below $2,400. Historically, February has been a strong month for ETH—only once negative, back in 2018.
The disproportionate drop in altcoins reflects heightened risk aversion. When markets turn volatile, capital typically rotates out of higher-risk assets first, leaving Bitcoin as a relative safe haven within crypto.
Over $790 Million in Leveraged Positions Liquidated
As prices tumbled rapidly, over **$790 million in leveraged positions were liquidated** within 24 hours. Long positions accounted for roughly $600 million of that total, indicating that many traders were caught off guard while betting on continued upside.
Such mass liquidations exacerbate price swings by triggering cascading sell orders. Automated margin calls force exchanges to close positions at market prices, often accelerating downward momentum during sharp moves.
This serves as a reminder of the dangers of excessive leverage in highly volatile markets.
From Post-Election Euphoria to Caution
The current slump stands in stark contrast to the optimism that followed Trump’s November 2024 election victory. At the time, markets rallied on expectations of pro-crypto regulation and innovation-friendly policies. Bitcoin surged past $100,000 amid speculation of favorable legislation.
However, those hopes have dimmed as immediate economic concerns—like inflation, trade policy, and global stability—take center stage. Markets are increasingly focused on fundamentals rather than political narratives.
Bitcoin is now down 4% year-to-date in 2025 and has lost more than 14% over the past month, erasing much of its earlier gains.
Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop below $90,000?
A: Bitcoin fell due to a combination of technical breakdowns (breaking below a key ascending wedge), low trading volume, negative macro news (Trump tariffs), a major exchange hack at Bybit, and sustained ETF outflows.
Q: Are cryptocurrencies still influenced by U.S. politics?
A: Yes. Despite their decentralized nature, crypto markets increasingly correlate with U.S. fiscal and trade policies. Tariff announcements and regulatory signals can trigger broad market reactions.
Q: How do exchange hacks affect the overall market?
A: Major hacks damage investor confidence across the ecosystem, even if only one platform is affected. They raise concerns about security standards and can prompt users to withdraw funds from other platforms as a precaution.
Q: What are Bitcoin ETF outflows?
A: ETF outflows occur when more investors sell their shares than buy them, leading to net fund withdrawals. Persistent outflows suggest declining institutional confidence or portfolio rebalancing.
Q: Why did altcoins fall more than Bitcoin?
A: Altcoins are generally riskier and less liquid than Bitcoin. During market stress, investors tend to exit high-beta assets first, making altcoins more vulnerable to sharp corrections.
Q: Could this downturn continue?
A: Analysts expect volatility to persist as traders assess upcoming events like the March 4 tariff deadline and potential retaliatory actions from Canada and Mexico.
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