Bitcoin has experienced a significant decline, dropping 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 to the presidency, reflecting a broader retreat from high-risk investments. The largest cryptocurrency by market capitalization fell by as much as 8.5%, marking the most considerable intraday drop since August. As of 11:20 a.m. in New York on Tuesday, Bitcoin was down 7.6% at $86,805, with other cryptocurrencies like Ether, XRP, and Solana also registering losses. An index tracking leading digital currencies is on track for its most significant four-day decline since early August.
The recent volatility in the cryptocurrency market marks a dramatic contrast to the risk-on rally that propelled crypto assets higher following Trump’s election in early November. Since his inauguration in January, Bitcoin has plummeted by approximately 20%, driven by Trump’s confrontational approach toward allies and geopolitical adversaries, which has unsettled investor confidence amidst ongoing inflation concerns. Adrian Przelozny, CEO of the crypto exchange Independent Reserve, noted, “The decline in Bitcoin prices is likely tied to the wider macroeconomic uncertainties that have affected most financial markets in recent days, associated with the various tariffs being introduced by President Trump.”
The declining cryptocurrency prices are indicative of a broader flight from riskier assets, a trend that gained traction late last week following a series of disappointing economic data, leading the Nasdaq 100 to its steepest four-day drop since September. Consequently, investors have shifted toward safer bond markets, causing the 10-year Treasury yield to decline for five consecutive sessions. Exchange-traded fund (ETF) investors, who played a significant role in fueling the post-election cryptocurrency surge, have started to retreat. The iShares Bitcoin Trust ETF, the largest spot Bitcoin fund, reported a rare outflow of $158 million on Monday, while nearly $250 million was withdrawn from the Fidelity Wise Origin Bitcoin Fund, marking it as the third-largest withdrawal among all ETFs. In total, over $956 million has exited U.S.-listed spot Bitcoin ETFs in February, making it the worst month on record for this category, according to data from Bloomberg Intelligence.
Recent bullish positions in cryptocurrency have faced substantial liquidations over the past two days, with figures reaching $815.8 million and $860 million, respectively, as reported by Coinglass. Perpetual futures, often favored by offshore investors due to their limited availability in the U.S., have seen a decline in leveraged long positions. Vetle Lunde, head of research at K33 Research, commented, “Perpetual traders showed an inclination to add BTC longs, but those holding long positions have mostly been punished as BTC hit new yearly lows amid significant long liquidations. The aggressive positioning from offshore traders has fostered an environment conducive to ongoing volatility.”
Negative Sentiment Following High-Profile Hacks
The sentiment around crypto has soured further due to a series of industry-specific challenges, including the largest-ever hack targeting the exchange Bybit and a memecoin controversy involving Argentina’s President Javier Milei. These incidents help clarify why digital currencies have lagged behind other risk assets like technology stocks in recent weeks. The Bybit hack, in which analysts suggest North Korean hackers stole about $1.5 billion worth of Ether, has intensified concerns regarding the security of digital asset platforms. Reports indicate that these hackers have begun laundering the stolen funds, showcasing an alarming level of sophistication within North Korea’s hacking community.
Meanwhile, memecoins associated with Trump and his wife Melania, launched just before his inauguration, have also faced significant declines, undermining faith in his pro-cryptocurrency stance. The Trump token, for instance, has plummeted over 80% since its initial peak shortly after its launch, according to CoinGecko data. Caroline Mauron, co-founder of Orbit Markets, a liquidity provider for crypto derivatives, remarked, “The Bybit hack is the latest in a series of incidents, including questionable memecoin launches, that have revived negative memories for participants in the crypto market.”
Shares of crypto-related companies have also seen declines, with Coinbase Global Inc. dropping for the seventh consecutive day, now down 29% during this period. Strategy has lost approximately 20% over three days and is currently experiencing a downturn for the year. Additionally, Bitcoin miner MARA Holdings Inc. has seen a nearly 10% decrease, down 25% since December.
