A week-long rout in Bitcoin deepened amid the recent broader retreat from risky assets in the wake of US President Donald Trump’s tariff threats and crypto sector turmoil, marking a dramatic reality check for one of the most popular Trump trades.
The original cryptocurrency tumbled as much as 7.2% to $78,226 at one point Friday, bringing its decline from the all-time high reached less than six weeks ago to 28%. Bitcoin later pared the loss, and ended up trading little changed on the day. Bitcoin fell around 18% in February, the biggest monthly drop since June 2022.
“Some large players just said at the end of the day, ‘you know what, I’m just going to throw in the towel,” said Zaheer Ebtikar, co-founder of crypto fund Split Capital. “I think that’s what we saw this past week. There was definitely a lot of selling more than usual, so it’s hard to pinpoint one specific exchange or place.”
This week’s drop in Bitcoin has taken it to technical levels that many traders watch for signs that the selloff may have gone too far, inspiring dip buyers to step in and at least pause the declines. Bitcoin has fallen below its 200-day moving average, a closely watched indicator of the long-term trend, for the first time since October. Its 14-day relative strength index, a gauge of price momentum, this week fell below a level indicating the asset is considered oversold for the first time since September.
Trump said Thursday that 25% tariffs on Canada and Mexico would come into force from March 4, undermining hopes he might reverse course after a previous delay. He also said Chinese imports would face a further 10% levy, prompting officials in Beijing to promise “all necessary measures” in response.
The focus on trade tensions had led to a broad risk-off decline across markets on Friday, pushing down almost all Asian stock markets and fueling declines in Europe. But cryptocurrencies — which are deeply exposed to shifts in risk appetite — were among the worst hit.
Trump Trade Woes
The selloff underscores a swift change of fortunes for what was previously one of the most popular Trump trades in global markets: buying Bitcoin on the expectation that the president’s crypto-friendly approach would lead to a broad rally.
That worked for a while. Bitcoin hit its all-time high of $109,241 on Jan. 20, the day of Trump’s inauguration. But cryptocurrencies have recently come under pressure amid worries that Trump’s pugilistic approach to global trade could lead to broad pain.
“Given the macro environment, it’s not surprising to see we are where we are,” said Stefan von Haenisch, director of over-the-counter trading in Asia Pacific at crypto custody firm Bitgo Inc. Traders are still waiting for Trump to come up with concrete steps for the sector including a Bitcoin stockpile, he said.
What Bloomberg’s Strategists Say…
“The real panic may be ahead of us still. Bitcoin always has another 70%+ crash in its future, by construction. $72k-$74k would appear to be the technical crunch zone that might trigger the next crypto winter.“
— Mark Cudmore, MLIV Executive Editor
Read more here.
Investors are now being forced to consider quite how far the world’s biggest cryptocurrency can fall. There is support for the coin around $70,000, said Ruslan Lienkha, chief of markets at crypto platform YouHodler, pointing to technical analysis. But he said investors shouldn’t assume the rout in Bitcoin will get that bad.
“We will only see this level if negative sentiment dominates the equity markets,“ said Lienkha.
Bearish sentiment has also hit spot US Bitcoin exchange-traded funds. Investors have pulled a record $3.3 billion from US spot-Bitcoin exchange-traded funds in February, poised for the biggest monthly exodus since they debuted, as investors sought refuge in safer assets amid rising geopolitical tensions and persistent inflation concerns.
Trump has already made a few changes that have pleased crypto bulls, including putting crypto advocates in key positions. The Securities and Exchange Commission, which embarked on a yearslong crackdown under former Chair Gary Gensler, has also closed investigations into several crypto outfits in recent weeks.
Trump has said he wants to make the US “the crypto capital of the planet and the Bitcoin superpower of the world.”
