Bitcoin’s price fell below $91,000, experiencing a 4.5% drop to three-month lows, driven by uncertainties stemming from new tariffs announced by President Trump. The decline led to nearly $900 million in liquidations and significant outflows from Bitcoin ETFs, amounting to $552.5 million. This price movement reflects a deeper correlation with traditional markets, as uncertainty lingers over institutional investments and U.S. economic policies.

On February 25, 2025, Bitcoin’s price plummeted below $91,000, marking its lowest point since November 2024, a decline exceeding 4.5% within 24 hours. This drop is part of a broader downturn in the cryptocurrency market, which experienced an 8% reduction in total market capitalization, falling from $3.31 trillion to approximately $3.09 trillion. The latest market activity indicates the steepest single-day loss for Bitcoin since January 25, when it lost over $5,000 during a 5.2% drop.

The decline affected numerous cryptocurrencies, with Ethereum falling by 8.5% below $2,500 and XRP by 9% to $2.25. The rapid market adjustments triggered $900 million in liquidations, predominantly impacting long Bitcoin positions, which accounted for approximately $891.5 million. Among these, Bitcoin-specific long positions contributed $277 million to the liquidation total, exacerbating the downward price pressure.

Currently, Bitcoin is testing critical support between $90,000 and $92,000. Past attempts to hold this support in February did not result in significant recoveries, raising concerns. If Bitcoin fails to maintain this level, the 200-day exponential moving average at around $86,000 may serve as the next support zone for the cryptocurrency.

The influence of President Trump’s tariff announcements has been a major factor behind the price drop. Trump’s confirmation of a 25% tariff on Canadian and Mexican imports, alongside a 10% tariff on Chinese goods, has instigated fears of rising inflation and market volatility, prompting investors to shy away from riskier assets like cryptocurrencies.

Recent trends show an increasing correlation between Bitcoin and traditional financial markets. The S&P 500 declined by 2.3% over recent trading days, while the Nasdaq Composite fell by 4%. This general downturn in equity markets has adversely affected risk assets, including cryptocurrencies, highlighting the interconnectedness of these financial spheres.

Institutional demand for Bitcoin through spot exchange-traded funds (ETFs) has waned significantly, with total outflows reaching $552.5 million over the week ending February 21. This consistent trend of withdrawal signals that institutional investors may be either taking profits or reallocating their investments due to the prevailing market uncertainties.

The sentiment within the cryptocurrency community has been further strained by warnings from industry figures. Former BitMEX CEO Arthur Hayes has indicated that Bitcoin faces significant risks ahead, suggesting potential price implications from the activity of hedge funds engaged in positions within BlackRock’s iShares Bitcoin Trust.

Markus Thielen, CEO of 10x Research, remarked on the recent breach of the critical $95,000 threshold by Bitcoin. He noted that several macroeconomic factors are shifting, emphasizing caution for traders. Analysts from Bitfinex characterize Bitcoin’s position as being at a “critical juncture,” following an extended consolidation period that lacks the necessary momentum for a breakout.

A University of Michigan Consumer Survey on February 21 indicated a 10% drop in U.S. consumer sentiment, reaching a 15-month low. This decline suggests increasing concerns about inflation and economic uncertainty, further pressuring risk assets like cryptocurrencies and highlighting the complexities of current market conditions.

Despite the prevailing downtrend, there exists a substantial accumulation of buy orders at existing price levels that could provide some support against additional declines. It is critical for investors to ascertain whether this downturn will create a buying opportunity or signify the onset of a deeper correction as market behaviors evolve in relation to economic conditions and policies.

As Bitcoin currently trades at $90,784, the market remains volatile. Observers are keenly monitoring implications of Trump’s tariff announcements and the potential for recovery in institutional demand for Bitcoin ETFs, which will largely dictate future price movements in the cryptocurrency arena.

In conclusion, Bitcoin’s recent price drop below $91,000 is attributed to several interrelated factors, including U.S. tariff announcements, market liquidations, and declining institutional investment. Testing crucial support levels, Bitcoin’s trajectory will depend heavily on broader economic sentiments and policies affecting inflation. Market participants should remain vigilant for potential signs of recovery or continued downturns in the cryptocurrency sector.

Original Source: moneycheck.com

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