Bitcoin and Crypto Market Crash: Key Factors Behind the Downturn

The cryptocurrency market has faced significant turbulence, with Bitcoin (BTC) falling below $92,000 on Monday, extending an overall market decline of 8%. This drop follows US President Donald Trump’s announcement regarding tariffs on Mexico and Canada, set to begin on March 4, 2025. Alongside Bitcoin, Solana (SOL) experienced a sharp downturn, dropping below $150 due to multiple factors, including a security breach linked to the Lazarus Group’s Bybit hack.

This article explores the key drivers behind the recent market slump, including Trump’s trade policies, investor sentiment, liquidation trends, and security concerns impacting top altcoins.

Trump’s Tariffs Spark Crypto Market Downtrend

President Donald Trump stated in a White House press conference that his administration’s tariffs on Mexican and Canadian imports will proceed as scheduled. The new trade policy includes:

• A 25% tariff on goods imported from Mexico and Canada.
• A 10% levy on Canadian energy resources, including oil, natural gas, and electricity.

The announcement triggered uncertainty in global financial markets, leading investors to de-risk their portfolios. Consequently, the crypto market suffered an 8% decline, with Bitcoin dropping below $92,000, wiping out nearly $230 billion from the market capitalization.

Market Capitalization and Liquidations Surge

The decline in Bitcoin’s price had ripple effects across the entire cryptocurrency market. Data from CoinGecko and Coinglass highlights:

• Total crypto market capitalization plunged by $230 billion.
• Futures traders faced nearly $1 billion in liquidations, with BTC, Ethereum (ETH), and Solana (SOL) leading the losses.
• Bitcoin investment products saw outflows of $571 million last week, according to CoinShares.

The sell-off trend among institutional investors is being attributed to broader macroeconomic uncertainties caused by geopolitical risks, including the upcoming US elections and global trade disruptions.

Bitcoin and Solana Investor Demand Weakens

Bitcoin’s investor demand has weakened over the past month, marking its first negative reading since September 2023, according to CryptoQuant. Key indicators show:

• Active wallets and transaction volumes have declined.
• Bitcoin’s price previously surged past $100,000 but struggled to maintain momentum.

This downturn suggests that investors are growing cautious amid economic uncertainty. A CryptoQuant analyst noted:

“If uncertainty persists, we must consider the possibility of another prolonged consolidation phase, similar to what began in March 2024.”

Lazarus Group’s Bybit Hack and Its Impact on Solana

A major security breach has also contributed to the market downturn. The North Korean Lazarus Group has been linked to a recent hack on Bybit, a crypto exchange, which has further shaken investor confidence. Notably, investigations by crypto analyst ZachXBT revealed:

• The stolen funds were being laundered through newly launched meme coins on Solana’s Pumpfun platform.
• This has dampened investor interest in Solana and led to increased selling pressure on the SOL token.

As a result, Solana’s price dropped over 15% in 24 hours, marking one of its worst declines in recent months.

Broader Altcoin Market Performance

The impact of Bitcoin’s decline and the Solana security concerns have extended to other major altcoins. Ethereum (ETH), XRP, and Solana (SOL) all registered losses of nearly 10% over the past day.

Key Altcoin Movements:

• Ethereum (ETH): Fell by 8.5%, breaching the $3,500 level.
• XRP: Declined 9.2%, continuing its prolonged downtrend.
• Solana (SOL): Dropped over 15%, marking the steepest losses in the top 10 cryptocurrencies.

These declines indicate a broad-based risk-off sentiment among investors, likely to continue in the short term.

Bitcoin’s Long-Term Outlook Remains Bullish

Despite the current downturn, Bitcoin’s long-term trend remains bullish, supported by institutional adoption, supply scarcity, and network fundamentals.

Bullish Factors Supporting Bitcoin:

1. Supply Halving in 2024: The upcoming Bitcoin halving event will reduce the new supply, potentially driving prices higher.
2. Institutional Accumulation: Major financial institutions continue to integrate Bitcoin-based investment products.
3. Macro Hedge Appeal: Bitcoin remains a hedge against inflation and economic uncertainty.

Investment Strategies Amid Crypto Volatility

Given the current market volatility, investors should adopt a strategic approach:

1. Diversification: Reduce risk by allocating capital across different assets.
2. Stablecoins and Cash Reserves: Holding stable assets can mitigate losses during market downturns.
3. Long-Term Holding: Bitcoin and Ethereum’s long-term fundamentals remain strong, making them ideal for buy-and-hold strategies.
4. Monitoring Regulatory Trends: Keep an eye on global regulations, which may influence market movements.

Conclusion

The cryptocurrency market remains highly volatile, with recent declines triggered by Trump’s tariff policies, macroeconomic uncertainty, and security risks linked to the Bybit hack. While Bitcoin dropped below $92,000 and Solana saw double-digit losses, the long-term outlook for crypto remains optimistic, provided investors navigate market risks with a well-balanced strategy.

As the situation unfolds, traders and investors should stay updated on economic policies, regulatory changes, and security risks to make informed decisions.

ALSO READ: Crypto Price Today: Bitcoin Drops to $92K, Eth Crashes 8.75%