Summary:
Bitcoin's price dropped by 17.5% in February, marking the largest monthly loss since June 2022.
Currently at $84,252, Bitcoin is over 20% below its record high from mid-January.
Rising volatility and fears of a global trade war are contributing to the bearish sentiment.
Concerns over a cyber-attack on the Bybit exchange have further rattled market confidence.
Historical trends show Bitcoin's potential for recovery after sharp declines.
Bitcoin Faces Its Largest Monthly Loss Since 2022
Bitcoin has experienced a significant decline of 17.5% in February, marking its biggest monthly drop since June 2022. This downturn has pushed the cryptocurrency into a bear market, as enthusiasm following Donald Trump’s election victory wanes.
The price of Bitcoin fell to around $84,252 (£67,010) at the end of February, after hitting a three-month low of approximately $78,273 during trading. This decline means Bitcoin is now over 20% below its record high of $109,071 reached in mid-January.
Factors Contributing to the Decline
The recent volatility in financial markets has been attributed to concerns over a potential global trade war, especially after Trump announced intentions to impose new tariffs on imports from Canada, Mexico, and China. Following the “Trump trade” that had previously boosted markets post-election, both stocks on Wall Street and the US dollar have also weakened during February.
Regulatory Uncertainty and Cybersecurity Issues
The optimism that initially surged in the cryptocurrency market post-Trump's election has faded as traders anticipate a clear regulatory framework for cryptocurrencies from the Trump administration. This uncertainty, combined with a cyber-attack on the Bybit exchange, which resulted in the theft of $1.5 billion in digital assets, has negatively impacted market sentiment.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, expressed that the crypto market is still facing negative sentiment, stating, "The bears have been prowling around the crypto market, with crypto dropping 20% from its recent peak." Without clear support from Trump for the crypto sector, the nervousness in the market is expected to persist.
Historical Context
Bitcoin has shown resilience in the past, recovering from substantial monthly losses. For instance, in June 2022, it dropped 41% from $31,700 to $18,700, only to rebound by 26% in July.
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