Bitcoin's value has plunged significantly, falling below the pivotal $80,000 mark on February 28, 2025, leading to concern among investors over the potential for more severe market repercussions. The largest cryptocurrency by market capitalization dropped approximately 8.4%, settling at $78,955.9 during the early trading hours on Friday. This decline is part of the cryptocurrency's overall downward trend, as it is now poised to record over 22% losses for the month, spiraling nearly 27% from its all-time high of $108,000, which was reached shortly after President Trump's inauguration.
Investor anxiety is mounting concerning the economic impact of U.S. tariffs, with President Trump reaffirming plans for 25% tariffs on imports from Canada and Mexico, alongside additional levies on goods from China. These developments have heightened the risk-off sentiment among investors, prompting many to reduce their positions, especially as they eyed a significant inflation report expected later the same day.
The situation escalated sharply as major altcoins such as Ethereum and XRP also suffered substantial losses, each falling over 10% following Bitcoin's decline. Ethereum dropped by 10.6% to $2,108.50, reflecting fears across the broader market. Coin market losses reached about $660 billion, according to recent reports on weekly trends.
The sell-off is attributed to various factors, including rising inflationary pressures indicated by the Personal Consumption Expenditures (PCE) index, which is anticipated to register increases. The corresponding fears resonate deeply within the crypto community, leading many traders to trim their holdings as they brace for more volatile market conditions.
Overall sentiment has faltered, as illustrated by the Crypto Fear and Greed Index, which plummeted to extreme fear measures this week, recording only 10. Such bearish indicators suggest hesitation among investors, pushing many to liquidate positions, with nearly $3.68 billion worth of crypto being liquidated over the week's duration alone.
This downward trend for Bitcoin was exacerbated by negative headlines surrounding potential institutional withdrawal from Bitcoin investments, evidenced by ETF outflows totaling $2.48 billion. Analysts from 10X Research pointed out, "Our analysis shows over 50% of Bitcoin ETF inflows may have originated from hedge funds, representing significant selling pressure as these funds unwind their holdings."
Market observers note the decline also coincides with reports of the Bybit cryptocurrency exchange being hacked, resulting in the theft of $1.4 billion worth of assets, intensifying fears over the security and stability of exchanges. Investors have reacted strongly to this news, shifting their assets away from riskier trades, which was evident by the sudden rise to $71.5 billion in trading volume across Bitcoin pairs.
Recovery prospects remain cautious, with technical analyses indicating key levels of support at the $78,000 to $80,000 range. Failure to reclaim these levels could see Bitcoin testing its next significant support at $73,000 or lower, challenging the prevailing bullish sentiment displayed earlier this year.
Despite the negativity, some analysts are holding out hope for recovery. According to Elliott Wave Theory, Bitcoin's recent corrective decline is nearing completion. The 4-hour chart shows it has tested the 0.5 Fibonacci retracement level, and if it can maintain support, it could initiate Wave 5, targeting higher price levels of around $90,000. “A successful bounce from the current level could mark the beginning of this phase,” stated Anton Chashchin, Founder & CEO of N7 Capital.
While many traders remain on edge, reacting to news and potential macroeconomic changes, there’s immense interest continuously developing around Bitcoin's volatility. Analysts warn of the necessity to keep abreast of forthcoming financial data and geopolitical shifts, as these could dramatically sway market confidence.
Overall, the immediate future for Bitcoin appears grim, with various economic headwinds impacting its ability to regain previous highs. Nonetheless, as the situation develops, both potential buying opportunities for brave investors and additional trading strategies continue to evolve amid the complex digital asset environment.