Bitcoin Drops Below $90,000: A Significant Setback for Cryptocurrency Markets

By Vaamanaa Sethi
Updated: February 25, 2025, 06:21 PM IST

In a surprising slide, Bitcoin (BTC) has dipped below the $90,000 mark on Tuesday, marking an approximately 8% decline in the cryptocurrency market. This downturn comes amidst growing concerns over potential tariffs announced by US President Donald Trump on Mexico and Canada, which are set to take effect on March 4. The cascading effect of this geopolitical uncertainty has prompted many investors to flee from riskier assets, leading to a dramatic reduction of over $230 billion in the overall cryptocurrency market capitalization.

Tariffs Spark Market Concerns

The imminent tariffs have raised questions about their potential implications for international trade and economic stability. As investors grapple with these uncertainties, many are opting to reduce their exposure to volatile investments like cryptocurrencies. As a result, the crypto market is experiencing a significant downturn that has seen Bitcoin and other major digital currencies face severe selling pressure.

Broader Impacts Across the Crypto Market

Bitcoin’s drop is accompanied by similar declines in other prominent cryptocurrencies. Ether, the second-largest cryptocurrency by market capitalization, has witnessed a decline of over 10% in the last two days, exacerbating its earlier losses. The selling pressure has also affected notable altcoins such as Solana and Dogecoin, which have dropped approximately 15% and 13%, respectively.

Jeff Dorman, the Chief Investment Officer at Arca, noted, “Crypto is just weak and has been for eight weeks. In contrast, equities, fixed income, and gold seem unaffected by the factors influencing weakness in crypto.” Dorman attributes the downturn not only to external pressures but also to poor market sentiment and the failure of several meme coins to sustain investor interest.

Support and Market Reactions

As of early Tuesday morning in Hong Kong, Bitcoin trades have shown some signs of stabilization, priced at around $91,902. This stability follows an announcement from Strategy, a significant player in the cryptocurrency industry, revealing a recent investment of nearly $2 billion in Bitcoin over the past week.

Despite this news, Ether remains under substantial pressure. Crypto exchange Bybit announced its commitment to fully compensate an estimated $1.4 billion lost in a recent hack, attempting to restore investor confidence in the platform. However, the impact on market sentiment remains palpable.

Implications for Crypto-Related Companies

The downturn in cryptocurrency prices has also been reflected in the stock prices of companies involved in the crypto space. Coinbase Global Inc. has seen its shares fall for six consecutive days, losing value as market conditions deteriorate. MicroStrategy, another significant investor in cryptocurrency, has experienced a decline of approximately 5.7%, marking a challenging start to the year for the company. Moreover, shares of Bitcoin mining company MARA Holdings Inc. fell 5.3% on Monday, adding to a two-week decline of 13%.

Conclusion

The current wave of uncertainty within the cryptocurrency market highlights the sensitivity of this asset class to external political events and market sentiment. As Bitcoin struggles to regain its footing below the $90,000 threshold, investors are urged to consider the inherent volatility and potential risks associated with digital currencies. The broader implications of tariff actions and market conditions will continue to be closely monitored by analysts and investors alike.

Disclaimer: This article is for educational purposes only. The views expressed do not necessarily represent the views of Mint. Investors are advised to consult certified experts before making any investment decisions.