The cryptocurrency market is facing a tough time after excitement from Donald Trump’s election win faded. Bitcoin, the biggest cryptocurrency, has seen a sharp drop. It had its worst month since June 2022, falling by 17.5% in February. Bitcoin’s decline is a sign of waning enthusiasm, and the market is now in a bear phase.
At the end of February, Bitcoin traded around $84,252 (£67,010). This came after it had dropped to a three-month low of $78,273. Bitcoin’s price has fallen more than 20% from its all-time high of $109,071, reached in mid-January. This decline marks the 11th worst drop for Bitcoin in the last decade.
Concerns About Trade Wars Add to Market Woes
The fall in Bitcoin’s price comes amid fears of a global trade war. Trump recently said he would place new tariffs on imports from Canada, Mexico, and China. This caused instability in financial markets. Many investors are worried that these trade tensions will harm global growth.
When Trump won the election, many believed he would support cryptocurrencies. Speculation grew that he might even set up a Bitcoin reserve. This hope helped Bitcoin’s price surge. But now, with trade tensions rising, Bitcoin is losing steam. Wall Street stocks have also weakened, and the US dollar has declined, which added to the pressure on the crypto market.
Without clear support from the Trump administration, Bitcoin has struggled to hold its ground. Investors are waiting for the government to give clear guidance on its stance toward cryptocurrency. The lack of action on this front has left many feeling uncertain about the future of crypto.
Hackers Shake Confidence with $1.5 Billion Theft
Adding to the uncertainty, Bitcoin and the wider crypto market were shaken by a major cyberattack in February. Hackers stole $1.5 billion in digital assets from Bybit, one of the largest cryptocurrency exchanges. This breach has heightened concerns about security in the crypto world. Many investors are now worried that their investments could be at risk from hackers.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said, “The bears have taken control.” She pointed out that Bitcoin had dropped 20% from its recent peak. Streeter explained that Trump’s trade policies have worsened market conditions, leading investors to sell riskier assets. She also mentioned that the Bybit hack has shaken confidence even further. Without a clear plan from Trump to support cryptocurrencies, uncertainty will likely continue.
Will Bitcoin Recover Again?
Despite the recent losses, Bitcoin has recovered from sharp drops in the past. For example, in June 2022, Bitcoin fell 41%, from $31,700 to $18,700. However, it made a strong comeback, rising 26% in July. Traders are hoping Bitcoin can bounce back again, but many are cautious.
Bitcoin’s history shows that it can recover from big declines. However, whether it will rise again depends on several factors. First, investors want to see clear rules from the Trump administration regarding cryptocurrency. Second, any improvement in global trade tensions could help the market.
If these factors align, Bitcoin could regain some of its lost value. But, for now, its future remains uncertain. Traders are watching the market closely to see what happens next.
What’s Next for Cryptocurrency Investors?
The crypto market is at a crossroads. Bitcoin’s drop is part of a larger trend of increased market volatility. Investors are more cautious as they watch for signs of economic trouble. Bitcoin and other cryptocurrencies face pressure from the global trade conflict and the security risks in the market.
The market’s path will depend on global conditions and how the government responds to cryptocurrencies. If trade tensions ease and clearer rules emerge, Bitcoin could find a way back up. However, if the uncertainty continues, the market may remain unstable.
For now, investors are advised to be careful. While Bitcoin has proven it can recover, the current climate makes it hard to predict when or if that will happen. The next few months will likely be important in shaping the future of Bitcoin and the broader crypto market.
For more business updates on the cryptocurrency market, visit Euro News 24.