The world of cryptocurrency is once again grappling with turbulence, as Bitcoin plunged below the $80,000 threshold for the first time since November. This sharp decline continues to stir uncertainty among investors, following the digital currency's historic peak of approximately $109,000 on January 20, 2025, coinciding with the inauguration of President Donald Trump, who has been viewed favorably by crypto advocates.
On February 26, the Bitcoin price reached as low as $79,627, reflecting more than 25% loss from its all-time high. The decline has sparked concerns across the crypto market as altcoins such as Ethereum (ETH), XRP, and Solana have also felt the impact of Bitcoin's drop. The overall sentiment within the market has soured significantly, with the Crypto Fear and Greed Index showing extreme fear at level 10, compared to the neutral level of 55 just one week prior.
According to Simon Peters, market analyst at eToro, the breaking of the support level at $92,000 triggered liquidations among positions, leading to the current sell-off. "The Bitcoin had relatively well resisted until the support level of 92,000 dollars was broken. I suspect this triggered a cascade of liquidations, which intensified the downward pressure on the price," he stated.
Market volatility is not new for cryptocurrency enthusiasts. The rise of Bitcoin over the past months spurred by Trump's pro-crypto sentiment was met with caution earlier this week following the news of $1.5 billion being hacked from the exchange platform Bybit. The government’s shifting stance on trade tariffs, with Trump announcing tariffs on goods from China, Canada, and Mexico, has also contributed to rising concerns about the economic environment, encouraging investors to move away from riskier assets like Bitcoin.
During the Asian trading hours, Bitcoin extended its price decline, dipping beneath its 200-day simple moving average, marking a 16% loss over the week. The recent increases to U.S. tariffs have strengthened the dollar, making Bitcoin investment less favorable.
Meanwhile, altcoins are not escaping unscathed. XRP has recently lost its key support level of $2.1, and tokens like Solana (SOL) and Dogecoin (DOGE) have also seen significant losses. SOL hit its lowest point since September at $1,256, and DOGE fell below 20 cents—a staggering retracement of approximately 78.6% from its October to December rally.
Despite the current downturn, some digital currencies are showing resilience. Litecoin (LTC), for example, appears to be maintaining its performance, oscillates between $135 resistance and $93 support, making it less affected by Bitcoin's fall. "The returns to the 9 and 18-day moving averages have allowed LTC to bounce back so far," noted market analysts.
Another relatively stable player during this volatility is TRON (TRX), which has risen nearly 900% since late 2022. Currently hovering around the support at $0.22, TRX remains positioned for potential recovery provided Bitcoin finds its footing again.
The significance of trading volumes cannot be understated as exchanges like Bybit grapple with their security protocols, especially after experiencing such notable breaches. Peters points out, "Today's market environment is surprising, especially with crypto advocates still waiting for concrete measures from Trump’s administration on how to support the digital asset market. Many hope tariffs won't deter crypto investment long term."
Looking forward, analysts suggest Bitcoin might see more drops if it fails to reclaim lost support levels. Peters mentioned, "A 35% dip could see prices fall to around $70,000, but this should be taken with caution as corrections are common within bullish cycles like Bitcoin's, which remains up about 70% year-on-year. Investors need to remain vigilant as trader sentiment shifts post-Tuesday's abrupt price adjustments."
The cryptocurrency market's inherent volatility can mean sharp rebounds are likely even after such steep corrections. Altcoins currently trading below are on the radar for potential quick gains should Bitcoin rally again, as current traders keep their eyes peeled for favorable entry points.
Clearly, the impact of geopolitical strategies, internal security issues, and changing market sentiment all play significant roles in influencing cryptocurrency costs. With hopes for regeneration, the industry waits to see if Bitcoin can regain its former stability or if the bearish tendencies will prevail.