Bitcoin has experienced a sharp downturn, plummeting to $78,363 as of Friday morning trading in London, marking a dramatic 25% decline from its all-time high of $109,241 reached on January 20th. The world's largest cryptocurrency has shed approximately 20% of its value in February alone, potentially making this the most significant monthly decline since June 2022.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appTrump Trade Optimism Fades
The recent selloff represents a stark reversal for what was previously one of the market's most popular "Trump trades." Initial enthusiasm following President Trump's inauguration, bolstered by his promise to make the US "the crypto capital of the planet and the Bitcoin superpower of the world," has given way to growing uncertainty. Despite appointing crypto advocates to key positions and the SEC closing several investigations into crypto companies, concrete policy developments have been limited.
Tariff Threats Trigger Risk-Off Sentiment
Thursday's announcement of impending 25% tariffs on Canada and Mexico starting March 4th, alongside additional 10% levies on Chinese imports, has sparked a broad market retreat from risk assets. Caroline Bowler, CEO of BTC Markets, noted that current sentiment echoes the "crypto winter" of 2022, describing the price collapse as "a response to macro fears on Trump's tariffs and geopolitical uncertainty."
Institutional Participation at Crossroads
Despite the recent turbulence, institutional adoption continues to show promising signs. Zodia Markets recently facilitated the first-ever Bitcoin trade for a UK pension fund, which allocated 3% of its portfolio to the digital asset. SEC filings indicate approximately $1 billion of pension fund money has flowed into spot Bitcoin ETFs. However, the most recent data shows concerning outflows, with investors withdrawing over $1 billion from spot Bitcoin ETFs on Tuesday alone – the largest single-day outflow since their inception.
Market Outlook
Traders are closely watching the critical support level around $70,000, where options market data reveals significant hedging activity. The "runaway gap" in CME Bitcoin futures below $80,000 is also under scrutiny – a technical pattern formed in November following Trump's election victory. Historically, such gaps eventually fill as the market seeks equilibrium.
As Chris Newhouse, research director at Cumberland Labs, notes: "Tariff policies are further dampening the outlook, and stubbornly high short-term inflation expectations add to the overall caution." With more than $2 billion in bullish positions liquidated over the past three days, the cryptocurrency market continues to search for a new catalyst to reverse the currently bearish sentiment.
Bitcoin (D1 Interval)
Bitcoin's price is currently trading below both the 200-day SMA and EMA. The first support level for bulls is around the mid-November weekend price of $75K–$76K. If this level is breached, bears may aim for a retest of the October high at $72,600. For bullish momentum to return, Bitcoin needs to reclaim the 200-day SMA. The RSI is at levels last seen in 2023, while the MACD continues to widen in bearish divergence.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
