Uncertainty surrounding U.S. President Donald Trump's tariff plans and crypto policy, as well as waning investor confidence following a $1.5 billion hack in rival cryptocurrency Ether, caused Bitcoin to drop to a 3-1/2-month low on Friday. For the first time since November 11, Bitcoin, the largest cryptocurrency in the world by market value, fell more than 5% during the day to $79,666, below $80,000.
According to Joshua Chu, co-chair of the Hong Kong Web3 Association, "Bitcoin's decline below $80k indicates that positive sentiments from a crypto-friendly administration and high-profile endorsements have run their course." Since mid-December, when it surpassed $105,000 on hopes that the Trump administration would support a strategic bitcoin fund and relax regulations, the largest cryptocurrency in the world has lost 25% of its market value.
Aside from a flurry of appointments of crypto-friendly officials when he took office, there has been little concrete news on the policy for investors. "Momentum ran out when there was no fresh news to keep driving the bullish narrative," said Kyle Rodda, senior financial market analyst at Capital.com."On top of that, given the move in Mag 7 stocks we've seen, which is also a story of momentum slowing and valuations deflating, bitcoin, which still trades as a 'higher beta tech' play, is being dragged down by sell-off in Wall Street tech stocks."
Ether, the second-largest cryptocurrency by market value, fell nearly 6% to $2,149.38, its lowest since January 2024. Additionally, investors have been withdrawing funds from bitcoin-backed exchange-traded funds. Global investors have been concerned about signs that the United States' so-called economic exceptionalism may be fading, as Trump prepares to impose tariffs that have fueled fears of higher global inflation and slower growth.
Trump has indicated that he intends to impose a 25% tariff on imports from Canada and Mexico beginning in early March, as well as additional tariffs on China. In an indication of concern, safe-haven US Treasury prices have risen sharply, sending yields to three-month lows.The crypto world has also been nervous since Dubai-based Bybit, the world's second-largest exchange after Binance, announced on February 21 that hackers had stolen ether worth approximately $1.5 billion.
Bybit has over 60 million users worldwide and provides access to a variety of cryptocurrencies, including bitcoin and ether.Elliptic, a blockchain research firm, said the hack was likely the largest known theft of any kind. "It's a combination of macro-forces. The Fed's only planned rate cut, additional tariffs, geopolitical and war-related uncertainties, and the ByBit hack all harmed confidence," said Reuben Conceicao, chief strategy officer at digital wallet firm Metasig. "It is hard for people to be excited and pump BTC when there are bigger issues at play."
