Bitcoin Dips Below $90,000 Amid Growing Economic Concerns
Significant Decline in Cryptocurrency Market
Bitcoin has fallen below $90,000, marking its lowest point since mid-November 2022. The cryptocurrency has seen a considerable drop amid an intensified selloff across the digital currency markets. At 7:51 a.m. New York time on Tuesday, Bitcoin plummeted as much as 7.6%, trading at approximately $89,042. This downturn has affected other major cryptocurrencies, including Ether, XRP, and Solana, contributing to the most significant four-day decline in the digital asset index since August.
Post-Election Fallout for Bitcoin
The decline in Bitcoin’s value is particularly striking given its initial surge following President Donald Trump’s election victory in November 2022. Since his inauguration in January, Bitcoin has dropped approximately 20%. Experts attribute this downturn to heightened uncertainty fueled by Trump’s trade tariffs and growing geopolitical tensions, both of which have shaken investor confidence.
Adrian Przelozny, CEO of crypto exchange Independent Reserve, commented, "The fall in Bitcoin prices is likely related to broader macro uncertainty that has hit most financial markets in the last couple of days and is linked to the various tariffs being announced by President Trump."
Broader Market Impact
This decline in Bitcoin is indicative of a larger trend, reflecting a shift away from risky assets as global markets grapple with economic slowdown fears. Notably, the Nasdaq 100 has suffered its worst three-day drop in two months. Investors are increasingly gravitating toward safer options, such as bonds, which has resulted in the 10-year Treasury yield dropping for five consecutive sessions.
Outflows from Bitcoin ETFs
Exchange-traded funds (ETFs), which significantly contributed to Bitcoin’s post-election growth, are also experiencing massive outflows. On Monday alone, the iShares Bitcoin Trust ETF (IBIT) experienced a rare outflow of $158 million, while the Fidelity Wise Origin Bitcoin Fund saw $250 million withdrawn. In total, U.S.-listed Bitcoin ETFs lost over $956 million in February 2023, marking the worst month on record for this category, according to data from Bloomberg Intelligence.
Massive Liquidations in Derivatives Market
The ongoing selloff has triggered substantial liquidations in the crypto derivatives market. According to data from CoinGlass, more than $1.34 billion in bullish crypto positions were wiped out in just 24 hours, further compounding the negative sentiment surrounding digital assets.
Security Breach Intensifies Concerns
Adding to the bearish sentiment in the cryptocurrency market is the recent security breach at Bybit, one of the world’s largest crypto exchanges. Hackers, allegedly linked to North Korea, managed to steal approximately $1.5 billion worth of Ether last week and have begun laundering the stolen funds. This cyberattack has raised significant concerns about the security of digital asset platforms, reminding investors of past incidents that resulted in severe market downturns.
Memecoin Controversies Fueling Market Worries
In addition to the aforementioned factors, recent controversies surrounding memecoins have further undermined market confidence. Cryptocurrencies launched by Donald Trump and his wife Melania have significantly underperformed, with the Trump token crashing over 80% from its peak, according to data from CoinGecko. Caroline Mauron, co-founder of Orbit Markets, stated that "the Bybit hack was the latest in a string of events, such as questionable memecoin launches, that have brought back unhappy memories for crypto market participants."
Future Outlook for Bitcoin and Cryptocurrency Market
Amid macroeconomic uncertainty, declining investor confidence, and various setbacks within the industry, the outlook for Bitcoin remains uncertain. Analysts advise caution as Bitcoin could face additional losses if macroeconomic conditions do not improve and regulatory concerns continue to loom.
Traders and investors are closely monitoring upcoming developments, including U.S. economic policies and potential regulatory moves, as they seek to understand the future direction of Bitcoin and the broader cryptocurrency market.
Frequently Asked Questions
Why is Bitcoin falling below $90,000?
Bitcoin’s decline can be attributed to Trump’s trade tariffs, significant ETF outflows, and recent security breaches affecting the crypto industry.
How much has Bitcoin lost since Trump’s inauguration?
Since Trump took office in January, Bitcoin has decreased nearly 20%, driven by increasing economic uncertainty and market instability.
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