Bitcoin Plunges 10.7% Amid Global Economic Fears

Bitcoin's price plummeted from $95,930 to $86,010 between February 24 and 25, marking its lowest level since November 2021. This 10.7% decline triggered over $760 million in leveraged long liquidations, raising concerns among traders about the strength of the $90,000 support level, which had held for the past three months.

Analysts have pointed to various factors behind the recent downturn, including $516 million in net outflows from spot Bitcoin exchange-traded funds (ETFs) on February 24. However, this explanation overlooks the fact that in the previous four days, total outflows reached $553 million, yet Bitcoin remained above $95,500. It appears that investor concerns over global economic growth and geopolitical tensions are the primary drivers behind the sell-off in risk markets.

US President Donald Trump's plans to impose tariffs on imports from Canada and Mexico starting in March, following a month-long delay, have exacerbated investor concerns. Yields on the US 10-year Treasury fell to their lowest level in three months, signaling strong investor demand for the safest assets. Meanwhile, the US dollar weakened against a basket of global currencies, as reflected in the DXY index, which dropped to 106.30 on February 25—also a three-month low.

The US administration's trade policies and potential economic damage have raised concerns about the US's role as the dominant economic force, which could negatively impact global growth. Other major assets, including Nvidia (NVDA), Tesla (TSLA), Palantir (PLTR), and Broadcom (AVGO), have also seen similar price declines since February 21, suggesting a strong correlation between Bitcoin and the technology sector.

On February 24, OKX settled with the US Department of Justice, agreeing to pay $500 million in fines for facilitating over $5 billion in suspicious transactions and criminal proceeds. Although not directly related to Bitcoin, the event casts a negative light on the US regulatory environment, including strategic cryptocurrency reserves. Nation-states and pension funds often struggle to differentiate Bitcoin from illicit financial activities involving digital assets, primarily stablecoins, reinforcing the perception of Bitcoin as a high-risk investment rather than a hedge instrument.