Bybit Hack, Meme Coin Controversy, and US Economic Worries Trigger Crypto Crash
Bitcoin suffered a sharp 7% decline, dropping below $89,000 for the first time in over three months, as the crypto market faced intensified selling pressure on February 25. As per Binance data at 3:20 PM, Bitcoin was trading at $88,893, marking a significant pullback from its December high of over $108,000.
The broader crypto market also tumbled, with Ethereum crashing 10.5% to $2,388 and Solana plunging over 13% to $137.87. The total market capitalization of Bitcoin now stands at $1.76 trillion, reflecting a shift in sentiment after months of bullish momentum.
Key Triggers Behind the Crypto Selloff
1. Bybit Hack: One of the Largest Crypto Heists
A major setback for the industry was the recent hack at crypto exchange Bybit, which resulted in significant losses. While exact figures remain undisclosed, security breaches of this magnitude tend to erode investor confidence.
“The Bybit hack was the latest in a string of events, such as questionable meme coin launches, that have brought back unhappy memories for crypto market participants,” said Caroline Mauron, co-founder of Orbit Markets, a crypto derivatives liquidity provider.
2. Meme Coin Controversy Involving Argentina’s President Javier Milei
The scandal surrounding Argentina’s President Javier Milei and his alleged involvement in a fraudulent meme coin project has also rattled crypto investors. This incident fueled concerns about the speculative and unregulated nature of meme coins, leading to broader skepticism in the market.
3. Fears of a US Economic Slowdown
Macroeconomic factors have also contributed to the bearish sentiment in the crypto space. Recent economic data from the US revealed a sharp decline in consumer sentiment, hitting a 15-month low in February.
Key concerns include:
- Soaring inflation expectations fueled by Donald Trump’s proposed tariffs.
- Declining US business activity, which has worsened the economic outlook.
- The long-term inflation target rising to 3.5% from 3.3%, leading to investor unease.
4. Shift in Sentiment from Post-Election Euphoria
The latest downturn is in stark contrast to the crypto rally seen around the US elections. Bitcoin had soared to an all-time high of $108,000 in December, driven by hopes of pro-crypto policies under a second Trump administration. However, the coin has since dropped nearly 18%, reflecting a cooling of speculative enthusiasm.
Altcoins Also Take a Hit
Bitcoin’s sharp decline has dragged down the entire crypto market, with major altcoins experiencing steep losses:
- Ethereum (ETH) – Fell 10.5% to $2,388.
- Solana (SOL) – Dropped 13% to $137.87.
- Dogecoin (DOGE) – Crashed nearly 13% to $0.201, reversing gains from its Elon Musk-driven rally in late 2024.
What’s Next for Bitcoin and Crypto Markets?
With multiple negative catalysts at play, analysts warn that Bitcoin could see further downside pressure in the short term. However, long-term bulls remain optimistic about Bitcoin’s growth, especially with:
- Upcoming Bitcoin halving in 2024, which historically triggers price surges.
- Institutional adoption, with companies increasingly integrating Bitcoin into their investment portfolios.
- Growing interest in Bitcoin ETFs, which could attract more mainstream investors.
For now, crypto investors are bracing for increased volatility, as macroeconomic uncertainties and regulatory scrutiny continue to shape the market’s trajectory.
