Bitcoin has plummeted to its lowest value since November, encountering its most significant weekly decline in over two years. This downturn is a consequence of a broader selloff in tech stocks, concerns surrounding American cryptocurrency policies, and a $1.5 billion hack affecting the Bybit exchange. This confluence of factors has cast a shadow over the cryptocurrency market’s sentiment.
On Friday, the world’s leading cryptocurrency by market capitalization experienced a 7% drop, reaching $78,273, the lowest point since November 10. This fifth consecutive day of losses brings the total weekly decline to 16%, the most significant since the FTX crypto exchange collapsed in November 2022. According to data from Coingecko, the wider crypto market has lost approximately half a trillion dollars within the past week.
“Inflationary pressures and diminishing growth prospects are compounding the situation, and Trump’s tariffs are not helping. With Trump focusing on anything except crypto deregulation, bitcoin traders are understandably anxious,” stated Matt Simpson, a senior market analyst at City Index.
Bitcoin typically mirrors the performance of assets such as tech stocks, which tend to rise when investors express optimism about economic growth. The Nasdaq (.IXIC), heavily weighted with tech stocks, is currently at its lowest point since November.
Investors are uneasy about signals suggesting a potential weakening of the US economy’s exceptionalism and are also wary of President Donald Trump’s moves to impose tariffs. These tariffs have ignited fears of escalating global inflation and slower economic expansion. Moreover, investors reacted negatively to Nvidia’s recent results.
A Changing Environment
The current economic environment differs significantly from the situation in mid-January when bitcoin approached $110,000. The market was then buoyed by expectations that the Trump administration would support a strategic bitcoin fund and loosen regulations. However, aside from a series of appointments of crypto-friendly officials when Trump took office, investors have not received any concrete news regarding such a policy.
Joshua Chu, Co-Chair of the Hong Kong Web3 Association, remarked that the decline in bitcoin’s price “demonstrates that the positive sentiment generated by a crypto-friendly administration and high-profile endorsements has run its course. It is now clear that bitcoin behaves as a risk asset, not the inflation hedge or the digital gold it is frequently portrayed to be.”
Ether, the second-largest cryptocurrency by market value, fell 6% to reach $2,149.38, the lowest since January 2024.
Adding to the market’s volatility, the “TRUMP” memecoin launched by Trump during his inauguration has lost 50% of its value since then, accompanied by a 90% loss in value for his wife’s “MELANIA” token.
Outflows from ETFs and Market Nervousness
Investor sentiment is further impacted by withdrawals from bitcoin exchange-traded funds (ETFs). US-listed bitcoin ETFs have seen outflows of $2.27 billion this week. On Friday, analysts from Bank of America noted that the price of bitcoin struggling to break above $97,000 since November was the first indication of a “bro bubble popping”.
Much of the recent hype around crypto has come from young male social media influencers and tech entrepreneurs known as “crypto bros.”
Further impacting the market, the Dubai-based Bybit exchange, the second-largest after Binance, revealed that hackers had stolen ether worth approximately $1.5 billion last week. This theft is believed to be the largest single crypto heist ever recorded.
Reuben Conceicao, chief strategy officer at digital wallet firm Metasig, stated that the price fall is due to a “combination of macro forces. More tariffs, uncertainties around geopolitics and war, and the ByBit hack didn’t help confidence either.”.
The price decline also affected crypto-connected stocks in premarket trading. Coinbase Global (COIN.O) and bitcoin buyer Strategy (MSTR.O) dropped by 2.3%, while miners Riot Platforms Inc (RIOT.O) and MARA Holdings (MARA.O) shed about 3.5%.
