Why is Crypto Down Today? Market Crashes as BTC Falls to $87k, Trump Tariffs & More

Why is Crypto Down Today? Market Crashes as BTC Falls to $87k, Trump Tariffs & More

TLDR

• Bitcoin dropped to $87,630, breaking a key technical pattern amid low trading volume
• Trump’s upcoming tariffs on Canada and Mexico contributed to market-wide selling
• A recent $1.5 billion hack at Bybit platform damaged investor confidence
• Bitcoin ETFs recorded over $500 million in outflows for two consecutive weeks
• Ethereum fell to $2,375 while other altcoins like Solana saw drops of nearly 15%

The cryptocurrency market experienced a sharp sell-off on February 25, 2025, with Bitcoin prices falling below $90,000 for the first time since November.

The market leader reached as low as $87,630, marking a 6.78% decline over 24 hours as multiple factors weighed on investor sentiment.

Technical analysts at Matrixport pointed to Bitcoin breaking out of an “ascending broadening wedge” pattern, which is typically viewed as bearish. In their February 25 post on X, they warned that “the likelihood of a deeper decline is increasing, particularly since this break is occurring during a period of low trading activity, which may result in limited demand to buy the dip.”

#Matrixport Today 📈 – Feb 25 2025⬇️#Bitcoin Breaks Key Pattern: Caution Warranted Amid Low Trading Activity‼️#Crypto #BTC #CryptoFinance #CryptoMarket pic.twitter.com/rnIlXpWUir

— Matrixport Official (@Matrixport_EN) February 25, 2025

The timing of this technical breakdown is concerning to market observers because low trading volumes can amplify price movements in either direction. With fewer buyers stepping in to purchase coins at discounted prices, the market may take longer to find its footing.

Trump’s Tariffs

President Donald Trump’s recent confirmation of new tariff plans appears to be a major trigger for the market decline. The administration will implement a 25% tariff on all Canadian and Mexican imports starting March 4, along with a 10% levy specifically on Canadian energy resources. Trump firmly stated on February 24 that “the tariffs are going forward on time, on schedule.”

The administration has justified these measures by citing concerns over illegal immigration and fentanyl trafficking. However, the announcement sent ripples through various financial markets, with technology stocks on the Nasdaq Composite closing down 1.2% on Monday – its third straight day of losses.

This connection between crypto and traditional markets shows how digital assets are increasingly moving in alignment with U.S. stock market trends. The days when cryptocurrency moved independently from mainstream financial assets appear to be fading, with Bitcoin now responding to many of the same economic factors that influence stocks.

ByBybit Hack

Adding to market woes was a major security breach at Bybit, a Dubai-based cryptocurrency exchange. Hackers managed to steal approximately $1.5 billion worth of digital assets last week, making it one of the largest crypto heists in recent memory. Such high-profile security failures tend to damage investor confidence across the entire crypto ecosystem, leading some to reduce their exposure to digital assets.

ETF Outflows

Institutional investment flows have also turned negative in recent weeks. U.S. spot Bitcoin exchange-traded funds (ETFs) recorded their second consecutive week with outflows exceeding $500 million leading up to February 21. Grayscale’s GBTC led the exodus with $60.08 million leaving the fund, continuing its streak of outflows following its conversion from a trust structure. Other ETFs also contributed to the negative momentum, with Bitwise’s BITB losing $16.58 million and Fidelity’s FBTC seeing $12.47 million in outflows.

Altcoin Market

The broader altcoin market suffered even steeper declines than Bitcoin. Ethereum, the second-largest cryptocurrency, fell below its support range of $2,600 to $2,800, dropping to $2,375. Analysts at Spot On Chain noted that Ethereum “could be heading for its worst February if it drops below $2,400,” pointing out that historically, February has been a bullish month for ETH with only one negative February recorded in 2018.

Solana (SOL) experienced one of the most dramatic drops among top assets, falling 14.85% to $143.13. XRP declined 10.85% to $2.30, while Cardano (ADA) lost 10.96% and traded at $0.6859. BNB fared somewhat better but still dropped 6.55% to $615.13. These steep declines across the board suggest widespread risk aversion in the cryptocurrency space.

The market turmoil resulted in nearly $800 million in leveraged positions being liquidated over 24 hours as traders faced margin calls amid rapidly falling prices. Long positions made up the bulk of these liquidations at approximately $600 million, compared to about $200 million in short positions. These figures highlight how many traders were caught unprepared by the sudden market downturn.

The current slump stands in stark contrast to the optimism that followed President Trump’s election victory in November 2024. At that time, Bitcoin and other cryptocurrencies rallied on expectations that the new administration would implement crypto-friendly policies. However, this bullish sentiment has been replaced by caution as traders focus more on immediate economic concerns.

Bitcoin down for the Year

Bitcoin is now down approximately 4% for the year 2025 and has lost more than 14% over the past month. This erases much of the gains from earlier in the year when prices reached all-time highs above $100,000. The recent price action demonstrates how quickly market sentiment can shift in the volatile world of cryptocurrency.

Traders and investors now remain on edge as they await further developments ahead of the March 4 tariff implementation deadline. The evolving trade situation, along with potential retaliatory measures from Canada and Mexico, could continue to impact digital asset markets in the coming weeks.

The combined effect of regulatory developments, security breaches, and large-scale liquidations has created a perfect storm for cryptocurrency markets.

Analysts expect that heightened volatility will persist as investors reassess risk in response to shifting global economic conditions.

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