Cryptocurrency Market in 2025: Analysis and Reasons for the Fall

What Happened on the Night of February 3, 2025?

On February 3, 2025, the cryptocurrency market capitalization dropped by approximately 8%. Bitcoin fell to $91,000, while Ethereum declined to $2,100. This volatility led to the liquidation of futures positions worth over $2.2 billion.

Experts attribute this sharp decline to the following key factors:

• The U.S. imposed tariffs of 25% on imported goods from Canada and Mexico and 10% on imports from China.

• Low liquidity in the cryptocurrency market, which amplified the downturn.

• A massive sell-off of altcoins by the crypto fund Scimitar Capital, which liquidated all its holdings, returning $2 billion in capital to its partners. This triggered a domino effect: the sharp decline in altcoin prices led to a wave of long position liquidations across the market.

Bybit's CEO reported that liquidations on their platform alone reached $2.1 billion, while total market losses were estimated at $8-10 billion.

Official Response and Future Actions

At 9:30 PM on February 4, 2025, Trump’s advisor on cryptocurrency and artificial intelligence, David Sacks, will hold a press conference to discuss the U.S. administration’s future policies regarding digital assets. This may provide the market with some clarity on upcoming regulatory decisions.

Meanwhile, social media is buzzing about a tweet from Trump’s son:
"In my opinion, this is a good time to add ETH. You’ll thank me later."

Additionally, World Liberty Financial, Donald Trump’s company, recently acquired $5 million worth of ETH, continuing to increase its cryptocurrency holdings.

Key Reasons for the Cryptocurrency Market Crash

1. Macroeconomic Pressure and Global Politics

The global economic situation significantly impacted the crypto market due to:

• Inflation and rising interest rates.

• Tightening monetary policies by central banks, reducing liquidity and making risky assets less attractive.

• Trade wars: In response to Trump’s tariffs, China imposed 10-15% duties on American oil, agricultural machinery, coal, and LNG.

2. Market Manipulation and Institutional Sell-Offs

Large hedge funds and traders heavily sold off Bitcoin and Ethereum, fearing regulatory hurdles and long-term profitability concerns. This caused a chain reaction of liquidations, further worsening market conditions.

3. Panic Selling and Investor Sentiment Shift

The widespread circulation of negative forecasts in the media and social networks led to panic selling, accelerating the market decline.

Negative sentiment on social media reached its highest level in a year, which may indicate potential buying opportunities. Historically, markets often move against the crowd’s expectations.

(Source: Santiment)

Will the Crypto Market Recover?

Although the current crisis is severe, many experts believe the market has the potential to recover. Robert Kiyosaki commented:

"Market crashes are the best time to get rich! Right now, top global assets—stocks, bonds, real estate, gold, silver, and BTC—are on sale."

Potential Recovery Factors:

• Market Cycles: After similar declines, recoveries typically follow, especially after events like Bitcoin halving.

• Regulatory Clarity: Clearer regulations could boost market confidence and attract more institutional investors.

• Technological Development: The increasing integration of cryptocurrencies into the financial system may support market recovery.

Conclusion

The cryptocurrency market shows signs of stabilization after U.S. President Donald Trump agreed to suspend the 25% tariffs on Canada and Mexico.

In 2025, the crypto market faces major challenges, but such corrections are a natural part of financial cycles. It is crucial to monitor macroeconomic factors, regulatory changes, and technological advancements to adapt effectively to new market conditions.