Written by: Glendon, Techub News

Since Bitcoin fell below the $90,000 mark on February 25, the cryptocurrency market plummeted across the board, and the market was like a slide, falling all the way. In the early morning of this day, Bitcoin fell to around $82,200, a new low since November 12, 2024; Ethereum also fell to around $2,100, erasing all gains since August 2024.

According to Coinglass data, as of writing, the total liquidation amount of the entire network in the past 24 hours exceeded US$772 million, of which the liquidation amount of Bitcoin and Ethereum accounted for 60% and 17% respectively, and the long positions of a large number of altcoins were also collectively liquidated within the past two days.

As market sentiment continues to be in a state of "extreme panic", although Bitcoin and Ethereum have fallen so much, there is still no stop to decline. So the question is, why did this round of plunge in the cryptocurrency market start?

Based on a variety of factors and analysis, the author believes that this market plunge may be a "panic stampede" phenomenon under the resonance of multiple negative factors.

On the macro level, it can be viewed in light of factors such as Trump's recent uncertainty shock, the US stock bubble, and the failure of the Fed's expectation of interest rate cuts.

First of all, although Trump has publicly expressed his support for Bitcoin as a "strategic reserve asset", he has not actively promoted the formulation of relevant cryptocurrencies since taking office. But in fact, long before Trump took office, the market conditions had been pushed to the peak by various optimistic expectations of investors. As Trump continues to advance tariff plans (such as imposing tariffs on imported goods on Mexico and Canada), some analysts point out that this has caused public concerns about the trade war, which has heated up risk aversion, resulting in investors choosing to sell high-risk assets such as Bitcoin.

In addition, the review process of US state-level Bitcoin-related bills has also begun to be hindered. At present, more than 30 states in the United States have proposed bills involving strategic Bitcoin reserves and digital asset investment, but some states have rejected the relevant proposals. The biggest influence is the South Dakota legislature seems to postpone it but actually kills the "Allow State to Invest in Bitcoin Act". During the same period, the strategic Bitcoin reserve bills proposed by Montana and Wyoming were also rejected.

The occurrence of this series of situations also exposed the differences between Trump and state level. Investors suddenly found that the passage of the Bitcoin bill did not seem to be as smooth as they imagined. When expectations failed again and again, it will undoubtedly weaken the market's confidence in Trump's "Crypto-friendly" commitment to a certain extent.

On the other hand, the US stock bubble and the Fed's interest rate cuts have also had an impact on the cryptocurrency market.

According to the First Financial News, as of February 26, the US stock market hasIt has been sold for four consecutive days, and popular star technology stocks have plunged at high levels, with cumulative declines ranging from 10% to 35%. Some analysts pointed out that this sentiment of selling high-valuation technology stocks is gradually spreading to the cryptocurrency field. Investors are worried that the US stock bubble will burst and their risk appetite will rapidly decline, resulting in funds withdrawing from high-volatility assets such as Bitcoin and Ethereum. At the same time, the Federal Reserve has not planned to cut interest rates for a long time. In the environment of high interest rates, the attractiveness of the US dollar as a global reserve currency has been enhanced, which has instead caused some funds to flow back from risky assets such as cryptocurrencies to US dollar assets.

The cryptocurrency market has been internal and external troubles recently, and its whole body is covered with "negative buffs".

Since February this year, Bitcoin spot ETFs have experienced a serious "blood loss effect". As an important inflow channel for institutional funds, their capital flow data is also one of the key indicators that affect market confidence. However, throughout February, Bitcoin spot ETF funds were almost in net outflows, including large net outflows of over 100 million US dollars.

According to iChaingo data, from February 18 to 26, US Bitcoin spot ETFs experienced net outflows for seven consecutive days, of which on February 25, the net outflow was as high as US$1.14 billion, setting the largest single-day net outflow record since its launch, which cannot help but reflect the pessimistic expectations of institutional investors for short-term price trends.

In contrast, although the situation of Ethereum spot ETFs is better than Bitcoin, they also experienced a five-day net outflow from February 20 to 26. However, the negative factors facing Ethereum are not limited to this.

In fact, Ethereum has long been in a dilemma of expansion and cannot extricate itself, which is the main reason for its relatively sluggish currency price in the past two months. Ethereum plans to ease the expansion problem through Pectra upgrade, but the process of launching the upgrade has not been smooth. According to CoinDesk, the Ethereum Pectra upgrade was activated on the Holesky test network but was ultimately not confirmed. As of now, Ethereum has not announced the reason why the test network failed to complete.

In addition, Solana, which once had a hit with Meme coins, has also suffered multiple blows recently. Under the repeated destruction of Trump's Meme currency TRUMP and the Meme currency LIBRA promoted by the Argentine president, the potential value of the Meme currency market has severely shrunk, and a large number of investors have lost interest in Meme currency. Many analysts even believe that the Meme currency boom is coming to an end. Because of this, the Meme currency market that Solana relies on has also entered a state of sluggishness.

What is even more heartbreaking is that Solana is about to usher in the largest scaleSOL tokens unlock "Storm". According to Cointelegraph, Solana will unlock more than 11.2 million SOL tokens (worth about US$2 billion) on March 1, which undoubtedly makes the SOL market "injury". Crypto analyst Artchick.eth analyzed that "more than 15 million SOLs (about US$2.5 billion) are expected to enter the circulation market in the next three months." Affected by this, SOL once fell to around US$130, setting a new low since September 18, 2024.

Late at night on February 21, the cryptocurrency trading platform Bybit was hacked, and more than 400,000 Ethereum and stETH (total assets worth more than US$1.5 billion) were stolen, becoming the largest theft case in the history of the currency circle. It also made the security of cryptocurrency again questioned and triggered panic selling by a large number of investors. Although Bybit has worked hard to minimize the negative impact, the huge amount of Ethereum stolen by hackers has undoubtedly become a "landmine" that affects the market.

As of writing, according to X User Ember Monitoring, the addresses marked as Bybit hackers have laundered about 71,000 Ethereum (worth about $170 million) in the past 24 hours. So far, the washout of Ethereum has reached about 206,000, but the hacker address still holds 292,000 Ethereum (worth about $685 million). Previously, Yuchen said that hackers expected to exchange all the remaining ETH into other assets (such as BTC, DAI, etc.) within half a month.

In addition to Bybit, stablecoin payment platform Infini was also hacked on February 24, with nearly $50 million in crypto assets stolen. Although the amount of stolen money is far less than the former, the successive hacking incidents not only hit investors' confidence, but also had a direct impact on the market.

To sum up, this round of decline is not only a adjustment of the market's own demand, but also a comprehensive response to the withdrawal of institutional funds, macroeconomic impact, hacking incidents and bubble bursting. The author believes that in essence, the continued rise of cryptocurrencies such as Bitcoin have accumulated a large number of profit-taking orders since the end of 2024. However, since early February, the price of Bitcoin has continued to fluctuate in the range of 90,000 to 100,000 US dollars, failing to break through the resistance level, and lacking major favorable support. Therefore, even if there is no major negative factors, the selling of these profit-taking orders will put huge pressure on the market price.

However, although the current market is hit by multiple factors, it is still too early to assert that the "bull market ends."

Yu Jianing, co-chair of the Blockchain Committee of the Communications Industry Association, said in an interview with Beijing Business Daily,The current downward trend is likely to be a technical adjustment rather than a long-term trend reversal.” The author believes that in the short term, we need to be vigilant about the further bottoming risks caused by the sell-off crisis, but in the medium and long term, the market may lay the foundation for a new cycle after clearing. In addition, if Trump proposes cryptocurrency-related and strategic Bitcoin bills in various states in the United States pass, it will inevitably bring unpredictable development to the entire cryptocurrency market.