Bitcoin has fallen below $90,000, reaching its lowest point since mid-November, as the surge that followed Donald Trump’s election as President begins to reverse in the face of a wider decline in riskier assets. The leading cryptocurrency experienced a drop of as much as 8.5%, marking its largest intraday decline since August. By 11:20 a.m. in New York on Tuesday, Bitcoin was down 7.6%, trading at $86,805. Other digital currencies also experienced declines, with Ether, XRP, and Solana showing significant decreases during the session. An index that tracks major digital tokens is on track for its largest four-day decline since early August.
The recent volatility in cryptocurrency markets represents a notable contrast to the bullish rally that followed Trump’s election in early November. Since his inauguration in January, Bitcoin has decreased by approximately 20%, as Trump’s aggressive policies towards allies and international adversaries have shaken investor confidence, compounded by ongoing worries about high inflation.
“The drop in Bitcoin values appears to be tied to broader macroeconomic uncertainties affecting most financial platforms in recent days, particularly linked to the various tariffs being introduced by President Trump,” remarked Adrian Przelozny, CEO of crypto exchange Independent Reserve. The decline in cryptocurrency values reflects a wider retreat from riskier investments, a trend that gained traction late last week following a series of disappointing economic reports that led to the Nasdaq 100 experiencing its worst four-day decline since September. Consequently, investors have shifted their focus to safer bond investments, resulting in the 10-year Treasury yield falling for five consecutive sessions.
Investors in exchange-traded funds (ETFs), who significantly contributed to the post-election rally in cryptocurrencies, have begun to withdraw. The iShares Bitcoin Trust ETF, the largest fund focused on Bitcoin, saw an outflow of $158 million on Monday, a notable event given its rarity, while nearly $250 million was pulled from the Fidelity Wise Origin Bitcoin Fund, marking one of the largest withdrawals among all ETFs. Data from Bloomberg Intelligence indicates that February has seen more than $956 million exit from US-listed spot Bitcoin ETFs, making it the worst month on record for this category.
Recent bullish positions in the cryptocurrency market have faced substantial liquidations over the past two days, with figures reaching $815.8 million and $860 million, respectively, according to Coinglass. Perpetual futures, often utilized by offshore traders due to their limited availability in the US, have shown a decrease in leveraged long positions. “While perpetual traders have shown a willingness to increase Bitcoin longs, many have faced severe losses as Bitcoin hit new yearly lows amid significant long liquidations,” stated Vetle Lunde, head of research at K33 Research. “The aggressive strategies of offshore traders have fostered a setting conducive to ongoing volatility.”
Negative Sentiment Following Major Hacks and Scandals
Market sentiment has also dampened following a series of significant setbacks in the industry, including the largest crypto hack of all time targeting the Bybit exchange and a memecoin controversy involving Argentina’s President Javier Milei. These events have contributed to the underperformance of digital currencies compared to other riskier assets like tech stocks in recent weeks. The Bybit incident, in particular, has intensified concerns regarding the security of digital asset platforms. Analysts indicate that hackers, believed to be associated with North Korea, stole approximately $1.5 billion worth of Ether in last week’s cyber assault and have begun laundering the proceeds. Several experts have noted that this heist demonstrates an increasing level of sophistication among North Korean cybercriminals.
Memecoins associated with Trump and his wife Melania, launched shortly before his inauguration, have also seen disappointing performance, further eroding trust in his pro-crypto policies. The Trump token has plummeted more than 80% since its initial peak following its launch, according to CoinGecko data. “The Bybit hack is the latest in a series of incidents, including dubious memecoin launches, that have rekindled unpleasant memories for participants in the crypto markets,” said Caroline Mauron, co-founder of Orbit Markets, a liquidity provider for crypto derivatives. Shares in crypto-related firms have also declined, with Coinbase Global Inc. experiencing its seventh consecutive day of losses, down 29% over that span. Strategy has lost around 20% over three days and remains in the red for the year. Bitcoin miner MARA Holdings Inc. saw its shares drop nearly 10%, marking a 25% decrease since December.
