Due to investor skepticism following a $1.5 billion attack in competitor cryptocurrency Ether and uncertainty around the U.S. President Donald Trump’s trade intentions and crypto policies, Bitcoin dropped to a 3-1/2-month low on Friday. The largest cryptocurrency in the world by market value, Bitcoin, was last down almost 5% for the day at $79,666, falling below $80,000 for the first time since November 11.
Joshua Chu, Co-Chair of the Hong Kong Web3 Association said: “Bitcoin’s fall below $80k shows that positive sentiments from a crypto-friendly administration and high-profile endorsements have run their course”.
Since mid-December, when it surpassed $105,000 on hopes that the Trump administration would support a strategic bitcoin fund and relax regulations, the largest cryptocurrency in the world has lost 25% of its market value.
At $2,149.38, the second-largest cryptocurrency by market value, Ether, was down about 6% and at its lowest level since January 2024. Additionally, investors have begun withdrawing cash from exchange-traded funds backed by bitcoin.
While Trump is getting ready to implement tariffs, which have fuelled fears of weaker growth and greater global inflation, investors around the world have been wary of any indications that the U.S. economy’s so-called special status may be eroding.
Bitcoin’s slide has traders hedging against a drop to $70,000
Bitcoin options indicate that traders and investors are protecting themselves against a drop in the cryptocurrency to levels last observed just after election day, as the so-called Trump bump is fading across markets.
Data from Deribit, the biggest cryptocurrency options exchange, shows that among all contracts expiring on February 28, put options with a strike price of $70,000 had the second-highest open interest, or number of outstanding contracts. On Friday, open interest of $4.9 billion is scheduled to expire.
As investor confidence is shaken by Donald Trump’s aggressive approach against both allies and geopolitical enemies, and worries about high inflation persist, Bitcoin has fallen approximately 20% from its peak since his inauguration in January. A historic hack of the Bybit exchange last week also rocked the cryptocurrency industry.
“Tariff policies are further dampening the outlook, and stubbornly high short-term inflation expectations add to the overall caution,” said Chris Newhouse, director of research at Cumberland Labs. “The Bybit exchange hack has exerted additional downward pressure on price and negatively impacted sentiment.”
For the fourth day in a row, Bitcoin dropped, falling about 5.6% to $83,744, bringing its overall decline to over 13%. Since August, that four-day dip has been the worst. With declines of 7% to 10%, respectively, other coins like Ether and Solana were still being struck more severely.
Additionally, declining demand for Bitcoin exchange-traded funds was probably a contributing factor in the most recent price drop. Over the last six days, outflows from the funds totalled almost $2.1 billion.
On Tuesday, investors pulled more than $1 billion out of spot Bitcoin ETFs, the largest withdrawal since the cohort’s launch in January of last year.
Fidelity Wise Origin Bitcoin Fund (FBTC) was the largest outflow, followed by the iShares Bitcoin Trust ETF (IBIT) from BlackRock Inc. To a lesser extent, outflows totalling $130 million were also observed in the group of ETFs that directly own Ether.
In a risk-off climate, investors have chosen to wait on the sidelines and rotate out of cryptocurrencies due to the lack of a clear indication for another bull run.
Ravi Doshi, co-head of markets at crypto prime broker FalconX.“The crypto market is still in search of a new catalyst to reverse bearish sentiment,”
