The cryptocurrency market has been rocked recently, witnessing dramatic declines and losses over the past 24 hours. The market cap tumbled by approximately $230 billion, falling from $3.14 trillion to $2.91 trillion, as outlined by CoinMarketCap. Notably, Bitcoin's price has fallen below $90,000 for the first time since November 2023, which has left investors reeling.
Within the derivatives market, the damage has been severe as well, with over $1.3 billion in long positions liquidated amid heightened volatility. The fear and greed index for the crypto market has plummeted to 29 out of 100, one of the lowest levels recorded since September 2023, according to CoinMarketCap. These declines have been exacerbated by news of the hack on Bybit, which resulted in the loss of $1.5 billion worth of ETH. Nonetheless, Bybit has reassured its users by indicating it has managed to fill the gap left by the hack attributed to the North Korean hacker group, Lazarus.
Previously, the market had been relatively stable for weeks, but now multiple factors have led to what many are calling a 'cascade of red' across digital assets. Cauê Oliveira, BlockTrends PRO analyst, pointed out one of the main culprits is the reduced liquidity structure among exchanges following the Bybit hack. With many investors withdrawing their funds out of fear, liquidity has drastically dwindled, making it easier for substantial selling pressure to impact asset prices.
Despite the alarming declines sending some retail investors running for the exits, large corporations, conversely, seem unfazed. Strategy, formerly known as MicroStrategy, took advantage of the situation to make its third-largest Bitcoin purchase to date, acquiring over $2 billion worth of the cryptocurrency or 20,300 units. This brings its total reserves close to 500,000 units. Further, Metaplanet announced on Tuesday the purchase of 135 units for $12.9 million.
Bitcoin, Ethereum, and other cryptocurrencies are facing precarious downward movements, compelling investors to offload their positions. Yet, there could be hope on the horizon: A recent tweet from Elon Musk questioning the gold reserves at Fort Knox has sparked expectations for Bitcoin's potential rebound. The U.S. government designates Fort Knox as 'the world’s safest asset,' currently housing purportedly 4,500 tons of gold since 1937. While this facility is known as a symbol of financial power, it hasn’t been publicly audited for decades, with the last press access occurring back in 1974, feeding rumors and conspiracy theories.
Interestingly, when Senator Mike Lee attempted to access Fort Knox recently, his request was denied on the basis of it being a 'Level 2a military facility.' This refusal ignited theories on whether some of the gold might have been sold off or pledged. Musk's inquiry, 'Is the gold still there?' has stirred the pot significantly, making some wonder if Fort Knox is merely a myth. Robert Kiyosaki, author of the best-selling book 'Rich Dad Poor Dad,' predicts catastrophic scenarios if the gold is not at Fort Knox, stating, 'If the gold is gone, the U.S. economy collapses. The dollar will collapse, and chaos will envelop the world.' Since 2023, Kiyosaki has been warning about potential banking crises, advising investments in precious metals, and asserting silver as the accessible alternative to gold.
Kiyosaki posits physical assets and Bitcoin as the only safeguard during such fiduciary system collapses. Conversely, David Schwartz, Chief Technology Officer at Ripple, downplayed the significance of gold's absence at Fort Knox, asserting it wouldn't impact the dollar's stability. 'Most people don’t care whether the gold is there or not. The dollar will continue to function normally,' Schwartz proclaimed, noting the dollar hasn't been backed by gold since 1971 and rests on public confidence instead. He suggested the only immediate effect might be a rise in gold prices but no substantial repercussions for the global economy.
The heated dialogue surrounding whether Musk might leverage his influence to gain access to Fort Knox poses the question: If senators can’t enter, can he? Known for challenging government protocols—evident through his dealings with dogecoin and former President Trump—Musk may turn such access attempts to media spectacles capable of shaking up the gold market and bolstering Bitcoin prices.
This engaging situation plays out against the backdrop of Bitcoin's price recently declining to under $90,000, marking its lowest point since mid-November. On Tuesday (25th), Bitcoin dropped by 7.6%, trading at around $88,997 on the New York Exchange. Other cryptocurrencies are feeling the sting as well, with ETH, XRP, and Solana also experiencing significant price drops, as the token index tracking major digital currencies heads for its largest four-day decline since August.
Adrian Przelozny, CEO of Independent Reserve, suggested the Bitcoin price drop is likely tethered to broader macroeconomic uncertainty affecting financial markets, which has been exacerbated by tariffs announced by President Trump.
The iShares Bitcoin Trust ETF lost $158 million on Monday following large withdrawals, with nearly $250 million pulled from the Fidelity Wise Origin Bitcoin Fund—the third-largest exit among all ETFs. February saw over $956 million leave U.S.-listed bitcoin ETFs during what was marked as the worst month for the category, according to Bloomberg Intelligence data.
Adding to investors’ distress is the recent security breach at Bybit, the largest theft of cryptocurrencies recorded, where hackers believed to be associated with North Korea made off with $1.5 billion worth of ETH. This incident has heightened concerns over digital asset security. The market's abysmal performance puts cryptocurrencies, particularly Bitcoin, significantly underperforming other risk assets, including technology stocks.
Caroline Mauron, co-founder of Orbit Markets, expressed, 'The Bybit hack was the latest among numerous challenges, like dubious memecoin launches, reigniting distressing memories for cryptocurrency market participants.' The market's tumultuous week poses questions about the future trends of both cryptocurrencies and the broader financial system.