Bitcoin’s value has been on a downward trend for four days, nearing its lowest mark in almost a month today, February 3, 2025. Since the previous Friday, it experienced a drop of nearly 14%, largely in reaction to newly proposed tariff regulations from the U.S. administration.
The downturn in Bitcoin has also sparked panic among alternative cryptocurrencies, leading to a brief market crash. Understanding the recent price movements and the factors contributing to these changes in the cryptocurrency market is essential.
The primary trigger for the decline has been the recent announcement of a 25% tariff on goods from Canada and Mexico, effective from Tuesday, with additional tariffs anticipated on products from the European Union. This news instigated a significant drop in Wall Street’s future contracts, marking declines across major indices, with the Dow down 1.4%, S&P 500 down 1.9%, and Nasdaq dropping 2.4%. Concurrently, the U.S. dollar gained strength, climbing 1% against a basket of other currencies.
In this context, Bitcoin’s plummet seemed almost unavoidable. As of today, Bitcoin is trading at roughly $95,700, down 2.3% compared to the previous day’s close, with the decline reaching nearly 7% at one point last night. After experiencing four consecutive days of losses—amounting to a total decrease of about 14%—the currency is now probing the $91,281 mark, a threshold not seen since January 13.
Market experts noted the predictability of this reaction. Concerns about market stability were evident, with calls for investors to remain vigilant and act quickly amid the ongoing turbulence.
Despite the significant sell-off, Bitcoin still appears to have maintained strong support levels. For the past two months, it has held above $92,000, an essential boundary for its recent price consolidation. This level has come under pressure multiple times, notably at the beginning of the year, consistently offering a defense for bullish investors. The most recent bullish indicator emerged two weeks prior, which saw Bitcoin reach historical highs at $109,312.
Market observers suggest that the closing dynamics of today’s session warrant attention. If Bitcoin can sustain above the $92,000 threshold and end higher, it may indicate that buyers are prepared to rally around this support level.
In the event of a price breakdown below this level, the next significant area to watch would be $83,000, associated with the 200-day Exponential Moving Average (EMA). This EMA serves not only as support but also as a signal of continued upward momentum since October. A drop under this moving average would imply increased pressure from sellers.
The downturn in Bitcoin has had ripple effects across the cryptocurrency space, particularly with altcoins suffering more severe losses. Ethereum fell by over 20%, approaching $2,150; XRP plummeted more than 30% to around $1.80; and Dogecoin slid by 25%, testing just $0.27. Even a memorialized cryptocurrency themed around the previous administration lost 17%, trading significantly below its initial listing price.
The extent of these market movements is underscored by the mass liquidations of leveraged positions, totaling approximately $2.26 billion in 24 hours, of which nearly $1.88 billion were from bullish positions. While Bitcoin faced liquidations amounting to around $411.8 million, Ethereum alone accounted for a striking $611.6 million.
The general atmosphere of fear among cryptocurrency investors is evidenced by the fear and greed index dropping to 39 points, signaling a notable level of anxiety that has contributed to the recent selling pressure. Consequently, the overall cryptocurrency market volume has dwindled to $3.11 trillion, reaching lows not seen since November.
While the challenges facing Bitcoin and the broader cryptocurrency market stem from prominent macroeconomic factors, future growth prospects remain. With strong technical support around the $92,000 mark still showing resilience, and anticipated events like the Bitcoin halving in 2024 on the horizon, many analysts maintain a cautiously optimistic outlook. However, short-term volatility is to be expected as geopolitical and economic uncertainties continue to play a significant role in market dynamics.