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Where does bitcoin go after more than 20 per cent decline?
Combination of factors, including ETF outflows and geopolitical tensions surrounding US trade policies, have contributed to this downturn, say analysts
- PUBLISHED: Thu 27 Feb 2025, 1:54 PM
Bitcoin, the world’s largest cryptocurrency by market capitalisation, has fallen below the $85,000 mark to trade at $83,740 on Thursday as the cryptomarket faces a sell-off pressure.
The steep decline is more than 20 per cent from its January peak of $109,350. This is the largest selloff in 2025.
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Analysts suggest that a combination of factors, including ETF outflows and geopolitical tensions surrounding US trade policies, have contributed to this downturn, with some forecasting a potential drop to $74,000.
As of 10:38am, bitcoin’s price stood at $84,916.18 (BTC/USD), with a market capitalisation of $1.68 trillion and a 24-hour trading volume of $67.37 billion. The cryptocurrency declined by 4.61% on Wednesday, with a circulating supply of approximately 19.83 million BTC, according to Binance.
The recent market turbulence has been fuelled by heightened concerns regarding US trade policies. President Donald Trump's suggestion of imposing tariffs on Canada and Mexico has added to the uncertainty. Although a White House official later clarified that the previous March 2 deadline for tariffs remains in place, the ambiguity has intensified market volatility. In response to reports of a potential 25% tariff on the EU, Bitcoin briefly fell to $82,300, prompting significant liquidations — over 157,000 leveraged traders lost a total of $766 million, with long positions accounting for approximately 80% of these losses, according to Vikram Subburaj, CEO of Giottus.
Investor sentiment in the cryptocurrency market has turned markedly cautious. The Crypto Fear and Greed Index has plummeted from a neutral reading of 55 to a fear-driven 21 within a week, reflecting growing anxiety among traders. This sentiment has been further exacerbated by a recent hack of the Bybit exchange and escalating trade tensions.
Simon Peters, a crypto analyst at eToro, notes that bitcoin had previously demonstrated resilience until it hit the $92,000 mark, a level that had served as a support point since November 2024. The break below this critical threshold likely triggered a cascade of liquidations, amplifying the downward momentum. “Historically, bitcoin bull markets often see corrections of 25-35% before establishing a new base for growth. Currently, we are down 20 per cent from our all-time high, and a drop of 35 per cent could see Bitcoin testing levels around $70,000. However, this is not a guaranteed outcome,” Peters explains.
Despite the current market turmoil, Peters advises long-term investors to maintain perspective. “While large price fluctuations can be alarming, such movements are common across asset classes. It’s important to remember that Bitcoin remains approximately 70 per cent higher than it was a year ago,” he emphasizes.
For investors with available liquidity and a long-term outlook, this correction could be an opportune moment to bolster their bitcoin holdings. The current volatility presents both risks and opportunities, and those who believe in Bitcoin’s long-term potential may find value in the lower prices.
Cryptocurrency analysts argue that while Bitcoin’s recent decline reflects broader market uncertainties and geopolitical tensions, its long-term trajectory remains a subject of interest for many investors. As the cryptocurrency landscape continues to evolve, staying informed and strategically navigating market fluctuations will be crucial for both new and seasoned investors.