Bitcoin’s recent decline below the $90,000 threshold has garnered significant attention from investors and analysts alike. On February 25, 2025, the cryptocurrency’s value fell to $87,629, marking its lowest point since November 14, 2024. This downturn is attributed to a confluence of factors, including substantial ETF sell-offs, prevailing macroeconomic conditions, escalating US-China trade tensions, and significant market liquidations. While these developments have raised concerns, historical patterns suggest that such corrections are inherent to Bitcoin’s long-term market cycles.
Bitcoin Falls Below $90,000
The drop to $87,629 on February 25 represents a notable decline from Bitcoin’s all-time high of $109,000 in January 2025. This 20% decrease has prompted discussions about the potential for further downside, with analysts cautioning about continued sell-offs. The breach of the $90,000 support level is particularly significant, as it may signal additional vulnerabilities in the market.
ETF Outflows Drive Bitcoin’s Decline
A critical factor contributing to Bitcoin’s recent slump is the substantial outflow from U.S. spot Bitcoin ETFs. On February 24 alone, these ETFs experienced net outflows exceeding $516 million. This trend has persisted, with six consecutive days of selling since February 18, culminating in total outflows surpassing $1.14 billion in the two weeks leading up to February 21. This marks the largest two-week withdrawal since Bitcoin ETFs commenced trading in January 2024. The significant withdrawal eclipsed the previous record of nearly $564 million set on May 1, when spot Bitcoin ETFs saw substantial outflows following a 10% price drop to $60,000.
The declining interest in Bitcoin ETFs suggests a shift in investor sentiment, possibly driven by concerns over the cryptocurrency’s short-term prospects. This trend underscores the influence of institutional investment vehicles on Bitcoin’s market dynamics.
Market Concerns and Analyst Views
Analysts have expressed apprehension regarding the sustainability of Bitcoin’s rally amid these ETF outflows. Iliya Kalchev, an analyst at Nexo, points to several macroeconomic factors exacerbating Bitcoin’s vulnerability:
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High Interest Rates: The Federal Reserve’s hawkish stance, characterized by elevated interest rates, has dampened demand for risk assets like cryptocurrencies. The possibility of prolonged high rates has led to cautious investor behavior.
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Reduced Global Purchasing Power: Inflationary pressures have eroded consumer purchasing power worldwide, leading to decreased investment in speculative assets.
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Declining Open Interest and Spot Inflows: A reduction in open interest and spot market inflows indicates waning enthusiasm among traders, further contributing to price declines.
These elements collectively render Bitcoin susceptible to broader economic trends, highlighting the interconnectedness between macroeconomic conditions and cryptocurrency markets.
US-China Trade Tensions Weigh on Crypto Sentiment
Escalating trade tensions between the United States and China have also played a role in dampening crypto market sentiment. President Donald Trump’s mention of a potential visit by Chinese President Xi Jinping to the U.S. and the prospect of a trade deal, albeit without a specified timeline, has introduced uncertainty. The lack of concrete developments has left investors wary, as geopolitical disputes can lead to market volatility. The imposition of new tariffs by both nations has further exacerbated concerns, with fears of a global trade war contributing to increased market instability.
Crypto Liquidations Surge to $1.3 Billion
The recent market downturn has precipitated a surge in liquidations across the cryptocurrency landscape. In a 24-hour period, approximately 362,000 traders faced liquidations totaling $1.3 billion, with Bitcoin alone accounting for $523 million of this amount. This wave of liquidations has intensified selling pressure, as traders are forced to close positions, further driving down prices.
Compounding the market’s challenges, a significant security breach occurred on February 21, when the cryptocurrency exchange Bybit suffered a $1.4 billion hack—the largest in crypto history. This event has severely undermined investor confidence, leading to heightened caution and additional sell-offs.
Bitcoin Market Cycle Perspective
Despite the prevailing concerns, some analysts view the current decline as a natural component of Bitcoin’s cyclical behavior. Raoul Pal, CEO of Global Macro Investor, draws parallels between the present correction and patterns observed in 2017, during which Bitcoin experienced five corrections averaging 28%, each lasting two to three months. These periodic downturns were followed by substantial upward movements, suggesting that corrections are integral to Bitcoin’s long-term growth trajectory.
Historical data supports this perspective, indicating that Bitcoin’s price movements often adhere to cyclical patterns. For instance, previous cycles have demonstrated that after reaching all-time highs, Bitcoin undergoes significant corrections before embarking on new upward trends. This cyclical nature implies that while short-term volatility is inherent, the long-term outlook remains optimistic.
Conclusion
Bitcoin’s recent dip below $90,000 is the result of a complex interplay of factors, including substantial ETF outflows, challenging macroeconomic conditions, escalating geopolitical tensions, and significant market liquidations. While these developments have understandably raised concerns among investors, it’s essential to recognize that such corrections are characteristic of Bitcoin’s historical market cycles. The cryptocurrency has repeatedly demonstrated resilience, rebounding from downturns to achieve new highs. As the market continues to evolve, participants are advised to maintain a long-term perspective, acknowledging that volatility is an inherent aspect of the cryptocurrency landscape.
