The cryptocurrency market is experiencing a dramatic reversal of fortune as Bitcoin has plunged below $90,000, reaching its lowest level since mid-November.
This decline marks a significant departure from the buoyant rally that followed President Trump’s election, signaling a broader retreat from risky assets amid growing market uncertainty.
Bitcoin’s sharp drop, as much as 8.5%, represents its biggest intraday decline since August.
At 11:20 a.m. in New York on Tuesday, the largest cryptocurrency by market value was down 7.6% to $86,805.
Other cryptocurrencies, including Ether, XRP, and Solana, also experienced declines.
An index tracking top digital tokens is on track for its largest four-day drop since early August.
This recent turmoil in digital assets marks a stark contrast to the risk-on sentiment that propelled crypto markets higher after Trump’s election.
Since his January inauguration, Bitcoin has plummeted roughly 20% as Trump’s combative stance against allies and geopolitical rivals has shaken investor confidence, and concerns about persistent inflation linger.
“The fall in Bitcoin prices is likely related to broader macro uncertainty that has hit most financial markets in the last couple of days and is linked to the various tariffs being announced by President Trump,” Adrian Przelozny, chief executive of crypto exchange Independent Reserve, told Bloomberg.
The tumbling crypto prices mirror a broader retreat from risky assets that gained momentum late last week, when disappointing economic reports sent the Nasdaq 100 to its worst four-day drop since September.
As investors shed riskier holdings, money has flowed into safer havens like bonds, pushing the 10-year Treasury yield down for five consecutive sessions.
Exchange-traded fund (ETF) investors, whose aggressive buying helped fuel the post-election crypto surge, have been stepping back from the market.
The iShares Bitcoin Trust ETF (ticker IBIT), the largest spot Bitcoin fund, experienced a rare outflow of $158 million on Monday.
Investors also pulled nearly $250 million from the Fidelity Wise Origin Bitcoin Fund, marking the third-largest withdrawal among all ETFs.
Bloomberg Intelligence data reveals that more than $956 million has exited US-listed spot Bitcoin ETFs in February, the worst month on record for the category.
Data from Coinglass reveals that bullish bets on crypto have faced hefty liquidations over the past two days, with $815.8 million and $860 million liquidated, respectively.
Leveraged long positions in perpetual futures, a popular tool among offshore investors, have also declined.
“Perp traders showed an appetite to add BTC longs, but longs have largely been punished as BTC pushed to new yearly lows amidst substantial long liquidations,” Vetle Lunde, head of research at K33 Research, told Bloomberg.
Aggressive positioning from offshore traders has created an environment ripe for continued volatility.
In addition to broader market forces, a series of recent industry-specific setbacks has further soured sentiment.
These include the biggest-ever crypto hack targeting exchange Bybit and a memecoin scandal involving Argentina’s President Javier Milei.
This helps explain why digital coins have underperformed other risk assets like technology stocks in recent weeks.
The Bybit hack, in particular, has heightened concerns about the security of digital-asset platforms.
Analysts say hackers linked to North Korea made off with approximately $1.5 billion of Ether in last week’s attack and have begun rapidly laundering the stolen funds.
Researchers suggest that the heist demonstrates a growing level of sophistication among North Korea’s cybercriminal forces.
Adding to the woes, memecoins launched by President Trump and his wife Melania just before the inauguration have performed poorly, further undermining confidence in his supposed pro-crypto policies.
CoinGecko data indicates that the Trump token has tumbled more than 80% since peaking almost immediately after its launch.
“The Bybit hack was the latest in a string of events, such as questionable memecoin launches, that have brought back unhappy memories for crypto market participants,” Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for crypto derivatives, told Bloomberg.
The widespread downturn in the crypto market is also reflected in the performance of crypto-related stocks.
Coinbase Global Inc. has fallen for seven consecutive days, and is down 29% over the period.
MicroStrategy lost around 20% over three days and is now in the red this year.
Bitcoin miner MARA Holdings Inc. has dropped almost 10% and is off 25% since December.
As market uncertainty persists and negative headlines continue to dominate the news cycle, the crypto market faces a challenging road ahead.
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