Bitcoin has plummeted below the $90,000 mark, reaching its lowest point since mid-November. This decline follows a sharp reversal of the rally that occurred after Donald Trump’s election as President, coinciding with a wider retreat from riskier investments.
On Tuesday, Bitcoin experienced a drop of as much as 8.5%, marking its largest single-day decline since August. By 11:20 a.m. in New York, the leading cryptocurrency by market capitalization was down 7.6%, trading at $86,805. Other digital currencies, including Ether, XRP, and Solana, also faced significant losses during the session. An index that tracks leading digital tokens is currently on track for its most considerable four-day decline since early August.
The recent downturn in digital assets sharply contrasts the risk-on sentiment that propelled cryptocurrency markets upward following Trump’s election in early November. Since Trump’s inauguration in January, Bitcoin has dropped approximately 20%, driven by his confrontational approach toward both allies and adversaries, which has undermined investor confidence, coupled with persistent concerns regarding high inflation.
Adrian Przelozny, CEO of crypto exchange Independent Reserve, noted, “The decline in Bitcoin prices is likely tied to broader macroeconomic uncertainties that have affected many financial markets lately, particularly due to the new tariffs announced by President Trump.” This decline in cryptocurrency values reflects a wider withdrawal from risky assets, a trend that gained traction late last week when a series of disappointing economic reports led the Nasdaq 100 to its most significant four-day drop since September. Consequently, there has been a shift towards safer investments, with the yield on 10-year Treasury bonds declining for five consecutive sessions.
Investors in exchange-traded funds (ETFs), who previously contributed to the post-election surge in cryptocurrency prices, have begun to retreat. On Monday, the iShares Bitcoin Trust ETF (IBIT), the largest fund for spot Bitcoin, experienced an outflow of $158 million, while nearly $250 million was withdrawn from the Fidelity Wise Origin Bitcoin Fund, marking the third-largest withdrawal among all ETFs. In total, more than $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 resulted in significant liquidations over the past two days, amounting to $815.8 million and $860 million, respectively, as reported by Coinglass. The use of perpetual futures, often favored by offshore investors due to limited availability in the U.S. market, has seen a reduction in leveraged long positions.
“Perpetual traders expressed interest in adding BTC long positions; however, those who took long positions have been adversely affected as BTC hit new yearly lows amid considerable long liquidations,” commented Vetle Lunde, head of research at K33 Research. “The aggressive positioning by offshore traders has created a volatile environment.”
Memecoins and Major Hacks Impacting Sentiment
Investor sentiment has also been negatively affected by a series of troubling events within the industry, including the largest recorded crypto hack targeting the exchange Bybit, along with a memecoin controversy involving Argentina’s President Javier Milei. These incidents help elucidate why digital currencies have lagged behind other risk assets like tech stocks in recent weeks. The Bybit hack, specifically, has heightened concerns regarding the security of digital asset platforms, with analysts suggesting that hackers associated with North Korea managed to steal approximately $1.5 billion worth of Ether in the recent breach and have begun laundering the stolen assets. Several researchers indicate that this heist demonstrates an increasing level of sophistication among North Korea’s hacking groups.
Additionally, memecoins introduced by Trump and his wife Melania just before the inauguration have struggled, further eroding confidence in his pro-cryptocurrency stance. The Trump token has plummeted over 80% since it peaked shortly after its launch, according to CoinGecko data. “The Bybit hack is just the latest in a series of incidents, including dubious memecoin launches, that have revived unsettling memories for participants in the crypto market,” explained Caroline Mauron, co-founder of Orbit Markets, a crypto derivatives liquidity provider.
Shares of companies linked to cryptocurrency have also seen declines. Coinbase Global Inc. has fallen for seven consecutive days, resulting in a 29% drop over this timeframe. The shares of Strategy have decreased by around 20% over three days and are currently in negative territory for the year. Bitcoin miner MARA Holdings Inc. experienced a nearly 10% decline and is down 25% since December.
