Bitcoin recently slipped below the $90,000 mark, marking its lowest point since mid-November and signaling instability within the cryptocurrency market. The diminutive trading volume appears to exacerbate the downturn, with analysts warning of potential for steeper declines. Reports indicate Bitcoin reached down to $88,500, suffering from losses amid macroeconomic pressures.
According to analysts from Matrixport, the digital asset fell 6.78%, breaking out of what is traditionally viewed as a bearish pattern known as the ascending broadening wedge. "The likelihood of a deep decline is increasing, particularly since this break is occurring during low trading activity, which may result in limited demand to buy the dip," stated Markus Thielen, independent analyst.
This decline isn’t solely confined to Bitcoin. Ethereum has also felt the pinch, dropping below its key support range between $2,600 and $2,800 to fall as low as $2,375. Analysts from Spot On Chain warn the currency might be heading for its worst February, having already dropped 23% this month. They noted, "Historically, February has been bullish for ETH, but with this fall, it could be another exception."
The overall picture worsens with crypto ETFs reporting significant outflows. Data indicates U.S. spot Bitcoin exchange-traded funds witnessed their second consecutive week of over $500 million exiting, primarily from Grayscale's GBTC, which alone saw $60.08 million exit. The negative momentum has deepened with contributions from Bitwise’s BITB and Fidelity’s FBTC, which reflected losses of $16.58 million and $12.47 million respectively.
Macroeconomic concerns play a major role as well. These pressures stemmed partly from the new tariffs applied during Donald Trump’s administration alongside industry setbacks. Bitcoin's sharp decline—down almost 20% since Trump's inauguration—is indicative of the broader trend. On February 25, Bitcoin dropped to $89,700 after initially dipping to its lowest, coinciding with savings and inflationary fears.
The current state contrasts with recent momentum when Bitcoin had been rallying after Trump's election. Other cryptocurrencies like Ether, XRP, and Solana have followed suit with drastic declines, prompting concerns across the board. The tech-heavy Nasdaq futures have also exhibited risk-averse tendencies, losing steam early on February 25, heightening the uncertainties surrounding Bitcoin’s performance.
With Bitcoin's price movement closely tied to global economic conditions, recent reports feature commentary from analysts. Valentin Fournier of BRN mentioned, "Despite U.S. President Donald Trump’s recent pro-Bitcoin stance, three state-level proposals for Bitcoin reserves failed." This highlights the growing political risk as policymakers dodge speculation with taxpayer funds, which reflects broader investor apprehension toward Bitcoin.
Andre Dragosch, head of research Europe at Biwise, emphasized the disconnect between Bitcoin's price and the global money supply. "There appears to be a lag between global money supply and BTC," he said, indicating the current price dip may recover as the money supply stabilizes. He also underscored how Bitcoin’s struggles track earlier market fears related to other financial sectors.
Adding to the bearish outlook is the strengthening Japanese yen against the U.S. dollar. The yen has seen its performance improve as investors took on risk-averse positions, reminiscent of shifts observed earlier when the yen’s strength harmed Bitcoin—a crash from $65,000 to $50,000 occurred during such phases. Joseph Wang, operator of the research portal fedguy.com, noted this potential correlation, "Massive yen strengthening sometimes occurs with big risk-off events, which we’re again witnessing right now."
The overall market sentiment remains cautious as trading activity stays sluggish with expectations of corrective phases stemming from preceding bullish trends. Despite the doom and gloom, some analysts remain hopeful for future price recoveries, particularly as market conditions and swap options change. For now, traders are advised to remain vigilant of political developments, macroeconomic news, and the interplay with global trading trends influencing Bitcoin and other cryptocurrencies.