Bitcoin has experienced a sharp downturn, plummeting to $78,363 as of Friday morning trading in London, marking a dramatic 25% decline from its all-time high of $109,241 reached on January 20th. The world’s largest cryptocurrency has shed approximately 20% of its value in February alone, potentially making this the most significant monthly decline since June 2022.
Trump Trade Optimism Fades
The recent selloff represents a stark reversal for what was previously one of the market’s most popular “Trump trades.” Initial enthusiasm following President Trump’s inauguration, bolstered by his promise to make the US “the crypto capital of the planet and the Bitcoin superpower of the world,” has given way to growing uncertainty. Despite appointing crypto advocates to key positions and the SEC closing several investigations into crypto companies, concrete policy developments have been limited.
Tariff Threats Trigger Risk-Off Sentiment
Thursday’s announcement of impending 25% tariffs on Canada and Mexico starting March 4th, alongside additional 10% levies on Chinese imports, has sparked a broad market retreat from risk assets. Caroline Bowler, CEO of BTC Markets, noted that current sentiment echoes the “crypto winter” of 2022, describing the price collapse as “a response to macro fears on Trump’s tariffs and geopolitical uncertainty.”
Institutional Participation at Crossroads
Despite the recent turbulence, institutional adoption continues to show promising signs. Zodia Markets recently facilitated the first-ever Bitcoin trade for a UK pension fund, which allocated 3% of its portfolio to the digital asset. SEC filings indicate approximately $1 billion of pension fund money has flowed into spot Bitcoin ETFs. However, the most recent data shows concerning outflows, with investors withdrawing over $1 billion from spot Bitcoin ETFs on Tuesday alone – the largest single-day outflow since their inception.
Market Outlook
Traders are closely watching the critical support level around $70,000, where options market data reveals significant hedging activity. The “runaway gap” in CME Bitcoin futures below $80,000 is also under scrutiny – a technical pattern formed in November following Trump’s election victory. Historically, such gaps eventually fill as the market seeks equilibrium.
As Chris Newhouse, research director at Cumberland Labs, notes: “Tariff policies are further dampening the outlook, and stubbornly high short-term inflation expectations add to the overall caution.” With more than $2 billion in bullish positions liquidated over the past three days, the cryptocurrency market continues to search for a new catalyst to reverse the currently bearish sentiment.
Bitcoin (D1 Interval)
Bitcoin’s price is currently trading below both the 200-day SMA and EMA. The first support level for bulls is around the mid-November weekend price of $75K–$76K. If this level is breached, bears may aim for a retest of the October high at $72,600. For bullish momentum to return, Bitcoin needs to reclaim the 200-day SMA. The RSI is at levels last seen in 2023, while the MACD continues to widen in bearish divergence.
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