Crypto just keeps dropping — what’s driving the crash, and what’s next?
Bitcoin (BTC) plummeted below $88,000, marking its lowest level in three months. The broader crypto market has also taken a hit, with total market capitalization shedding 8%, dropping from over $3.31 trillion to approximately $3.09 trillion.
The sharp decline comes amid macroeconomic uncertainty, regulatory concerns, and shifting investor sentiment. Analysts now warn that Bitcoin could drop further, potentially testing support at $70,000.
Despite this, Bitcoin has performed better than other cryptocurrencies like XRP (XRP), AAVE (AAVE), and others, dropping by over 15% in the last 7 days, according to crypto.news data.
“The crypto destruction here is mainly outside of Bitcoin,” said Mark Cudmore on Bloomberg TV. “Bitcoin is a relative outperformer.”
Several factors could be contributing to Bitcoin’s latest decline.
Crypto reacts to Trump’s tariffs
The immediate trigger for Bitcoin’s decline appears to be U.S. President Donald Trump’s confirmation of new tariffs on imports from Canada and Mexico, along with a 10% tariff on Chinese goods. Investors reacted negatively, fearing increased inflation and economic uncertainty, which pushed risk assets like Bitcoin lower.
Three weeks ago, Trump announced tariffs, causing Bitcoin to drop from $105,000 to a low of $91,441 as the crypto market declined nearly 10%. Trump’s confirmation of these tariffs seems to be rattling the markets again.
Correlation with traditional markets
Bitcoin’s price movement has started to mirror traditional financial markets. The S&P 500 has dropped 2.3% over the past five trading days, while the Nasdaq Composite has fallen 4%.
Bitfinex’s February 24 Alpha report highlighted that worsening U.S.-China relations and restrictions on semiconductor exports, particularly Nvidia chips, have contributed to declining investor confidence.
Collapse in volatility
Historically, sharp price swings have defined Bitcoin and crypto’s market cycles, but traders are now facing a period where momentum appears to be fading.
“There was a collapse in volatility recently,” said Cudmore. “There was an early warning sign that the next major collapse in Bitcoin was likely imminent.”
The drop in volatility has left some traders cautious, as periods of low price fluctuation often precede sharp breakouts — either up or down. With Bitcoin struggling to find direction, some fear that the current lull could set the stage for a deeper correction.
Source link