Bitcoin faced a challenging month, with its value declining amid increased volatility in the financial markets. This downturn, the largest monthly loss since mid-2022, stemmed largely from anxieties surrounding a potential global trade war and shifting attitudes toward cryptocurrency.
Bitcoin weakened last month amid rising volatility in the financial markets, blamed on fears of a global trade war. Photograph: Dado Ruvić/Reuters
The cryptocurrency market saw bitcoin’s price tumble by 17.5% in February, pushing it into a technical bear market. This decline marked the 11th worst monthly performance over the past decade. The asset closed February at approximately $84,252 (£67,010), having hit a three-month low during trading on Friday.
The recent downturn pushed Bitcoin more than 20% below its mid-January record high of $109,071. This decline coincided with fears of a global trade war. The market’s initial surge was linked to the “Trump trade” that followed the election. However, cryptocurrency stumbled as stocks on Wall Street, and the US dollar, also weakened during February.
Optimism regarding cryptocurrencies, which emerged after the election, was briefly reignited when Trump announced the inclusion of several crypto assets in a Crypto Strategic Reserve. However, the market faced additional pressure following a cyberattack on the Bybit exchange, which resulted in the theft of $1.5 billion in digital assets.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the market’s challenges: “The bears have been prowling around the crypto market, with crypto dropping 20% from its recent peak.” Streeter added, “Donald Trump’s aggressive trade approach has sparked concerns with investors hurtling away from riskier assets, and the huge hack of the Bybit exchange in Dubai has also rattled sentiment. Without any firm moves from Trump to show his support for the crypto sector, nervousness looks set to continue.”
Despite the recent fluctuations, Bitcoin has demonstrated the ability to recover from significant monthly falls in the past. In June 2022, its worst month, it dropped 41% from $31,700 to $18,700, before jumping by 26% in July.
Notably, crypto prices rallied after Trump announced the names of three cryptocurrencies that would be included in a new US strategic reserve. Trump indicated that his January executive order on digital assets would create a stockpile of currencies, including XRP (Ripple), SOL (Solana), and ADA (Cardano). He added that bitcoin and ethereum would be “at the heart of the Reserve”, driving bitcoin back up to $94,000.
