Bitcoin has faced a sharp decline recently, with its price dropping 7.71% to $87,086, fueling widespread concern and massive liquidations in the cryptocurrency market. A combination of factors has triggered this downturn, including geopolitical tensions and a security breach at Bybit, exacerbating the bearish sentiment.
Trump’s Tariff Escalation Sparks Market Uncertainty
One of the major factors behind Bitcoin’s decline is the re-escalation of trade tensions, specifically the recent tariff threats made by former U.S. President Donald Trump. On February 24, Trump announced the reinstatement of tariffs on Canadian and Mexican goods, which had previously been suspended. The imposition of 25% tariffs on Mexican and Canadian goods, along with additional duties on Canadian energy, has increased uncertainty in global markets. This uncertainty has spilled over into Bitcoin, which is often viewed as a risk-sensitive asset. Consequently, Bitcoin’s price dropped significantly, particularly during the early European trading session on February 27, leading to $1.34 billion in liquidations.
Bybit Hack Adds Pressure on Bitcoin Market
The Bitcoin crash was also exacerbated by a recent security breach at the Bybit cryptocurrency exchange. Hackers stole $1.4 billion worth of funds, contributing to market anxiety and further downward pressure on Bitcoin’s price. A large volume of Bitcoin was withdrawn from Bybit’s reserves, heightening concerns about the security of crypto exchanges. This breach, combined with the tariff news, contributed to a sharp decline in Bitcoin’s price, with many investors seeking safer platforms and moving their assets elsewhere.
Massive Liquidations and Bearish Sentiment
The sharp drop in Bitcoin’s price has resulted in significant liquidations across the cryptocurrency market. Over the past 24 hours, nearly 390,000 traders were liquidated, leading to a total loss of $1.59 billion, with most of these liquidations coming from long positions. One of the largest liquidation orders occurred on the Justin Sun-affiliated exchange, HTX, where a trader lost $39.62 million. This wave of liquidations and market volatility has left investors questioning whether the current dip is a temporary correction or the beginning of a more extended downturn.
Will Bitcoin Reach $1 Million?
Despite the current crash, some figures in the crypto space remain optimistic about Bitcoin’s future. Binance’s co-founder, Changpeng Zhao (CZ), suggested that the current dip could be a precursor to even higher Bitcoin valuations, with some even predicting that Bitcoin could reach $1 million in the future. While this long-term optimism exists, Bitcoin’s network activity has been declining, with the number of new Bitcoin addresses falling to a 2024 low. This decrease in network adoption could indicate weakening demand, which historically correlates with price drops.
Currently, Bitcoin’s price is trading at $87,086, and analysts are keeping an eye on the $86,000 support level. If Bitcoin can rebound from these levels, it may spark a relief rally, but market participants remain cautious in the face of uncertainty.
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