Bitcoin entered a corrective phase, dropping below $80,000 and losing almost 37% of its peak of $109K, which was reached during Trump’s inauguration on January 20.
The asset’s recent bad performance sent the entire cryptocurrency market into the red, wiping out 2025 gains.
The Crypto Fear and Greed Index recently reached an “Extreme Fear” score of 10, its lowest level in two years, as market sentiment sharply declined.
Trade war turns Bitcoin into Red Sea
A major factor in the downturn was the escalation of tensions between the US and some of its most important trading partners, such as China, Canada, and Mexico.
President Donald Trump’s announcement of new tariffs on goods coming from the three countries was the cause of the impasse. Furthermore, the President has threatened to levy a 25 percent tax on EU imports, alleging that the bloc was established to “screw” the US.
President Trump also disclosed that he would double the 10 percent universal tariff on Chinese imports and impose tariffs on Canada and Mexico beginning March 4.
The pioneer crypto asset dipped below the 200-day simple moving average, resulting in a 16 percent weekly loss. Prices momentarily fell below the $80,000 threshold for the first time since November 10, as fresh worries about the U.S. demand for the U.S. dollar increased due to trade tariffs.
Glassnode data showed that over the last three days, Bitcoin’s short-term holders realized losses totaling $2.16 billion, the main cause of the recent sell-off. Investors who bought Bitcoin last week experienced the biggest losses.
The $927 million in losses this group of holders incurred accounted for 42.85% of the losses incurred by the younger cohort. Similarly, holders who held the shares for a week to a month experienced $678 million in losses. $257 million was lost by those who purchased within a month to a year, $322 million was lost by those who bought within a day.
Less interest in Bitcoin Spot ETF
Additionally, the massive volume of withdrawals has put US-based spot Bitcoin ETFs in a dire situation.
According to Coinglass, 11 Bitcoin funds experienced a net outflow of $938 million, marking the sixth trading day in a row.
The Fidelity Wise Origin Bitcoin Fund (FBTC) was the day’s biggest loser, and its withdrawals, totaling $344.7 million, set a new ETF outflow record. The ETF exodus followed a crypto market meltdown that saw Bitcoin plunge into a bear market.
BlackRock’s iShares Bitcoin Trust (IBIT) finished in second place with a $164.04 million withdrawal.
The net loss for Grayscale’s two funds was $151.9 million, split between $85.8 million from its Bitcoin Mini Trust ETF and $66.1 million from its Grayscale Bitcoin Trust (GBTC). $88.3 million was lost by the Bitwise Bitcoin ETF (BITB).
Bybit hack weakens buying appetite
The $1.49 billion hack against the cryptocurrency exchange Bybit on Friday exacerbated the market correction for Bitcoin.
Bitcoin dropped from almost $100,000 to $97,370 after the hack was revealed. The pioneer cryptocurrency asset earlier made a slight recovery, returning to the $96,000 range through Monday
Extreme Fear in the Crypto Market
Bitcoin continued to follow the consolidation pattern observed early this week.
- However, President Donald Trump’s remarks about trade restrictions on Canada and Mexico sparked a new downward trend. After a month-long pause, the president declared that import duties on both countries would resume the following week.
- Extreme investor fear is indicated by the Bitcoin Fear and Greed Index, which has fallen to 10, its lowest level since June 2022. The market sentiment index dropped from 50, which was regarded as neutral, to 10 today, which denotes extreme fear.
- Extreme fear is frequently a sign that investors are unduly worried about market events and indicates a buying opportunity.
Market indicators show that the flagship crypto asset may fall as low as $70,000 before stabilizing. BitMEX co-founder Arthur Hayes has warned that extreme fear frequently precedes rebounds.
