Bitcoin has suffered its largest monthly drop since June 2022, plunging 17.5% in February and slipping into a technical bear market. The world’s biggest cryptocurrency closed the month at around $84,252 (£67,010), after hitting a three-month low of $78,273. This marks Bitcoin’s 11th worst month in the last decade, as negative sentiment sweeps across financial markets.
The asset has now fallen over 20% from its record high of $109,071 in mid-January, meeting the definition of a bear market. A combination of macroeconomic uncertainties, regulatory anxieties, and a major exchange hack have contributed to this downturn.
Trump Trade Euphoria Fades
After Donald Trump’s election victory in November 2024, Bitcoin and other cryptocurrencies surged on speculation that his administration would take a pro-crypto stance. Some even speculated that the White House could introduce a Bitcoin strategic reserve.
However, this optimism has faded as traders await concrete regulatory policies from Trump. Instead of a crypto-friendly push, his administration has sparked fears of a global trade war, with plans to impose new tariffs on imports from Canada, Mexico, and China. This has rattled financial markets, pushing investors away from riskier assets like cryptocurrencies.
Bybit Hack Adds to Market Jitters
In addition to the fading Trump trade, the market was shaken by a major cyber-attack on the Bybit exchange, where $1.5 billion worth of digital assets were stolen in February. This has further eroded investor confidence in the security of crypto platforms, adding to the bearish pressure.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, highlighted the impact of these factors, stating, “The bears have been prowling around the crypto market, with Bitcoin dropping 20% from its recent peak.”
Bitcoin’s History of Sharp Recoveries
Despite the current downturn, Bitcoin has a history of bouncing back from steep losses. In June 2022, it suffered a 41% drop, only to recover by 26% in July.
While the current correction has unsettled investors, history suggests that Bitcoin could regain strength, provided there is renewed institutional interest or regulatory clarity from the Trump administration. For now, market sentiment remains fragile, and further volatility could be on the horizon.
