The cryptocurrency market has experienced a severe downturn since Bitcoin fell below the $90,000 threshold on February 25. Prices have been sliding downward, with Bitcoin hitting a low of around $82,200 in early trading hours—its lowest point since November 12, 2024. Ethereum also dropped to approximately $2,100, erasing all gains made since August 2024.
According to Coinglass data, over the past 24 hours, the total liquidation across exchanges exceeded $772 million, with Bitcoin and Ethereum accounting for 60% and 17% of these losses, respectively. Many altcoin long positions were also liquidated during this period.
With market sentiment remaining in "extreme fear," the downward trend shows no signs of stopping. So, what triggered this cryptocurrency market crash?
Key Factors Behind the Cryptocurrency Market Crash
Macroeconomic and Policy Influences
- Political Uncertainty Under the Trump Administration
Despite initial optimism about Bitcoin as a "strategic reserve asset," the Trump administration has not actively advanced cryptocurrency policies. Trade tensions—such as new tariffs on imports from Mexico and Canada—have heightened investor anxiety, leading to sell-offs in high-risk assets like Bitcoin. - State-Level Bitcoin Bill Setbacks
Over 30 U.S. states proposed bills related to Bitcoin reserves and digital asset investments, but several, including South Dakota, Montana, and Wyoming, have rejected these measures. This has dampened confidence in the administration’s pro-crypto promises. - Stock Market Volatility and Fed Policy
The U.S. stock market faced a four-day sell-off, with tech stocks dropping by 10%–35%. This risk-off sentiment spilled over into cryptocurrencies, as investors moved away from volatile assets. Meanwhile, the Federal Reserve’s hesitation to cut interest rates strengthened the U.S. dollar, diverting capital from crypto back to traditional markets.
Internal Market Pressures
- Bitcoin ETF Outflows
Bitcoin spot ETFs saw significant net outflows in February, including a record single-day withdrawal of $1.14 billion on February 25. This reflects institutional pessimism about short-term price trends. - Ethereum’s Scaling Challenges
Ethereum’s Pectra upgrade, aimed at addressing scalability, faced hurdles during testing, further pressuring its price. - Solana’s Struggles
Solana’s reliance on Meme coins like TRUMP and LIBRA backfired as interest waned. Additionally, a massive SOL token unlock (20 billion worth) on March 1 exacerbated its decline.
Security Breaches and Investor Panic
- Major Exchange Hack
On February 21, Bybit suffered a historic breach, losing over $1.5 billion in Ethereum and stETH. Although damage control efforts are underway, the incident has shaken investor confidence. - Additional Attacks
Stablecoin platform Infini was hacked on February 24, losing $50 million. Repeated security failures have directly impacted market stability.
Market Outlook: Is the Bull Market Over?
While the current downturn is severe, experts caution against declaring the bull market dead.
👉 Learn how to navigate market volatility with expert strategies
Key Takeaways:
- The crash stems from macroeconomic pressures, internal market weaknesses, and security incidents.
- Short-term risks remain, but long-term recovery potential exists, especially if U.S. policies shift favorably.
FAQ Section
Q: Should I sell my cryptocurrencies now?
A: Panic selling often locks in losses. Assess your risk tolerance and consider diversification.
Q: Will Bitcoin recover?
A: Historical trends suggest recoveries follow major corrections, but timing depends on broader economic factors.
Q: Are altcoins riskier than Bitcoin?
A: Yes—altcoins typically face higher volatility and project-specific risks.
Q: How can I protect my crypto investments?
A: Use hardware wallets, enable two-factor authentication, and stay updated on security best practices.
This analysis combines on-chain data, macroeconomic trends, and expert insights to provide a comprehensive view of the market downturn.