Bitcoin’s value has plummeted below the $90,000 mark, reaching its lowest point since mid-November. This decline follows a rally that initially surged after Donald Trump’s election to the presidency, which is now reversing amidst a wider retreat from high-risk investments.
The leading cryptocurrency experienced a significant drop of up to 8.5%, marking the largest single-day decline since August. At 11:20 a.m. in New York on Tuesday, Bitcoin was down 7.6%, priced at $86,805. Other digital currencies, including Ether, XRP, and Solana, also experienced declines during this session. An index that monitors top digital assets is on track to record its largest four-day decrease since the beginning of August.
The recent volatility in the cryptocurrency market contrasts sharply with the bullish sentiment that followed Trump’s election in early November. Since Trump’s inauguration in January, Bitcoin has lost approximately 20% of its value, as his confrontational approach towards global allies and rivals raises investor apprehensions, compounded by persistent inflation worries. “The drop in Bitcoin prices is likely tied to the overarching macroeconomic uncertainties impacting many financial markets recently, particularly due to the various tariffs announced by President Trump,” explained Adrian Przelozny, CEO of crypto exchange Independent Reserve.
The decline in cryptocurrency values reflects a broader trend of investors retreating from risky assets, a shift that began gaining traction late last week after a series of disappointing economic reports sent the Nasdaq 100 into its steepest four-day decline since September. Consequently, there has been a significant movement of funds into safer bond investments, resulting in a continuous decrease in the 10-year Treasury yield over the past five sessions.
Investors in exchange-traded funds (ETFs), who previously contributed to the post-election surge in cryptocurrency prices, have begun to withdraw. The iShares Bitcoin Trust ETF, which is the largest fund focused on spot Bitcoin, saw an outflow of $158 million on Monday, marking a rare withdrawal. In addition, nearly $250 million was pulled from the Fidelity Wise Origin Bitcoin Fund, which represents the third-largest withdrawal among all ETFs. Data from Bloomberg Intelligence indicates that over $956 million has exited U.S.-listed spot Bitcoin ETFs in February, making it the worst month on record for that category.
The recent bullish investments in cryptocurrencies have led to substantial liquidations over the past two days, totaling approximately $815.8 million and $860 million, respectively, according to Coinglass data. Perpetual futures, which are often favored by international investors due to their limited availability in the U.S., have seen a decline in leveraged long positions. “Perpetual traders expressed a desire to increase their BTC long positions, but many have faced significant losses as BTC hit new yearly lows amid considerable long liquidations,” stated Vetle Lunde, head of research at K33 Research. “The aggressive positioning of offshore traders has created a volatile environment.”
Memecoins and Major Hacks
Investor sentiment has also been dampened by a series of recent industry-related challenges, including the most significant crypto hack ever, which targeted the exchange Bybit, as well as a scandal involving a memecoin linked to Argentina’s President Javier Milei. These events help clarify why digital currencies have not performed as well as other high-risk assets, such as technology stocks, in recent weeks. The Bybit breach, in particular, has intensified concerns about the security of digital asset platforms. Analysts believe that hackers associated with North Korea stole approximately $1.5 billion worth of Ether in last week’s incident and are now laundering the stolen assets. Several experts claim this heist demonstrates a growing level of sophistication among North Korea’s hacking factions.
Additionally, memecoins launched by Trump and his wife Melania shortly before his inauguration have seen lackluster performance, further undermining faith in his pro-cryptocurrency policies. The Trump token, for instance, has plummeted by more than 80% since it peaked shortly after its launch, according to CoinGecko data. “The Bybit breach, along with other questionable memecoin launches, has rekindled unpleasant memories for participants in the crypto market,” remarked Caroline Mauron, co-founder of Orbit Markets, a liquidity provider for crypto derivatives.
Shares of companies linked to the cryptocurrency sector have also declined, with Coinbase Global Inc. experiencing a drop for the seventh consecutive day and witnessing a total decrease of 29% during this period. Strategy has lost around 20% over three days and is now in negative territory for the year. Bitcoin mining company MARA Holdings Inc. has seen its shares fall nearly 10%, with a total drop of 25% since December.
