Bitcoin has seen a significant decline, plummeting below the $90,000 mark and reaching its lowest point since mid-November. This downturn follows a rally that emerged after Donald Trump’s election victory, as investors retreat from riskier assets amid growing market uncertainty.
The cryptocurrency dropped as much as 8.5%, marking its steepest intraday fall since August. As of 11:20 a.m. in New York on Tuesday, Bitcoin was down 7.6%, trading at $86,805. Other digital currencies, including Ether, XRP, and Solana, also experienced losses, contributing to an index that tracks leading cryptocurrencies, which is on track for its largest four-day decline since early August.
The recent volatility in the cryptocurrency market represents a stark contrast to the previous risk-on sentiment that fueled market gains following Trump’s election in early November. Since his inauguration in January, Bitcoin has declined approximately 20%, primarily due to Trump’s confrontational approach towards both allies and geopolitical adversaries, which has shaken investor confidence amid persistent inflation concerns.
Adrian Przelozny, the CEO of crypto exchange Independent Reserve, noted, “The decline in Bitcoin’s price is likely tied to the broader macroeconomic uncertainties affecting most financial markets recently, particularly the various tariffs introduced by President Trump.” The falling crypto prices reflect a larger trend of investors moving away from riskier assets, a shift that began late last week when disappointing economic data led to the Nasdaq 100 experiencing its worst four-day decline since September.
This shift has resulted in an influx of capital into safer bond investments, causing the 10-year Treasury yield to decline for five consecutive sessions. Exchange-traded fund (ETF) investors, who previously contributed significantly to the post-election crypto rally, have begun to withdraw. The iShares Bitcoin Trust ETF, the largest spot Bitcoin fund, experienced a rare outflow of $158 million on Monday, while the Fidelity Wise Origin Bitcoin Fund saw nearly $250 million pulled out, marking the third-largest withdrawal among ETFs.
In February alone, over $956 million has exited US-listed spot Bitcoin ETFs, making it the worst month on record for this category, according to data from Bloomberg Intelligence. The recent bullish positions in crypto have faced significant liquidations, with $815.8 million and $860 million liquidated in the past two days, as reported by Coinglass. Perpetual futures, which are often favored by overseas investors due to their unavailability in the US, have seen a decline in leveraged long positions.
Vetle Lunde, head of research at K33 Research, commented, “Perpetual traders showed interest in increasing their Bitcoin long positions, but many have suffered losses as Bitcoin reached new yearly lows amidst substantial long liquidations. The aggressive positioning of offshore traders has created an environment conducive to ongoing volatility.”
Recent Industry Setbacks Impact Sentiment
Investor sentiment has also been negatively affected by a series of industry-specific challenges, including a significant hack targeting the Bybit exchange and a memecoin controversy involving Argentina’s President Javier Milei. These incidents have contributed to the underperformance of digital currencies compared to other risk assets, such as technology stocks, in recent weeks.
The Bybit hack, which analysts believe involved hackers linked to North Korea, resulted in the theft of approximately $1.5 billion worth of Ether last week, with the stolen assets being laundered swiftly. Researchers have noted an alarming increase in the sophistication of North Korea’s hacking operations. Furthermore, memecoins launched by Trump and his wife Melania shortly before his inauguration have seen poor performance, undermining confidence in his pro-cryptocurrency stance. The Trump token has experienced a decline of over 80% since its initial peak, according to CoinGecko data.
Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for crypto derivatives, remarked, “The Bybit hack is just the latest in a series of troubling events, like questionable memecoin launches, that have resurfaced negative memories for participants in the crypto market.”
Shares of cryptocurrency-related companies have also taken a hit. Coinbase Global Inc. has seen its stock decline for seven consecutive days, resulting in a 29% drop over that period. Strategy has lost about 20% over three days and is currently in the red for the year. Additionally, Bitcoin miner MARA Holdings Inc. has fallen nearly 10% and is down 25% since December.
