3 Reasons Why Bitcoin is Down Today

The crypto markets initially looked like they had emerged through the Bybit hack relatively unscathed. Not anymore.

Bitcoin has now fallen to its lowest level in over three months, reaching depths of $86,008.23 at one point on Tuesday.

It’s now trading at a 20% discount to all-time highs set on the day of Donald Trump’s inauguration — technically plunging BTC into bear market territory.

Barring stablecoins, each and every one of the 50 biggest cryptocurrencies is nursing losses over the past 24 hours — with many altcoins down by double digits.

Ether, which was already underperforming against the likes of Bitcoin and Solana, has fallen by more than 10%.

XRP’s 11% loss means it has been dethroned as the world’s third-largest cryptocurrency once again — overtaken by the Tether stablecoin.

Solana, Dogecoin, Cardano, and Chainlink are just some of the other big-name casualties, with $300 billion wiped from the total market cap of all coins.

Sentiment has undoubtedly soured following the Bybit hack, but that isn’t the only factor at play here.

Bitcoin had been trading in an abnormally tight range for some time — flitting between $95,000 and $98,000 — and that normally indicates that there’s going to be a violent price swing one way or another.

But beyond disappointment that Donald Trump is yet to unveil a strategic Bitcoin reserve, there’s real concern about the impact that the president’s incoming tariffs will have on the U.S. economy.

On Monday, Trump declared that additional taxes on imports from the likes of Mexico and Canada will be going ahead “on time, on schedule” — indicating there won’t be any relief from a month-long pause that is due to expire soon.

Beyond that, it’s worth taking a look at how exchange-traded funds based on Bitcoin’s spot price are performing right now.

SoSoValue figures show that outflows stood at $516.4 million — following on from four consecutive days of losses last week.

Essayist, entrepreneur and BitMEX co-founder Arthur Hayes argues that how financial institutions react to this downturn will matter a great deal in the coming weeks… and believes Bitcoin could potentially fall back to $70,000.

Meanwhile, a recent Bitfinex report warned that Bitcoin is at a “critical juncture” after this long period of consolidation — especially considering that institutional demand in this digital asset is beginning to cool, writing:

“U.S.-based Bitcoin ETF purchases have dropped from 4,000 to 5,000 coins acquired per day (reaching a high of 18,000 on November 7) to 1,000 per day over the past week. This reduction in institutional demand through ETFs potentially signals a weakening of bullish momentum for Bitcoin.”

Bitfinex went on to note that Bitcoin has failed to reattempt a return to all-time highs above $109,000 “with any great conviction,” adding:

“Meme coins and Solana have in particular thrived when markets have been bullish, but their corrections have been equally sharp during downturns. Ethereum, while showing some relative strength, has underperformed throughout the cycle, and there has not yet been a consistent trend of outperformance relative to other assets.”

In trying to read the tea leaves about what lies ahead for Bitcoin in 2025, it might be worth looking at major stock market indices such as the S&P 500.

Bank of America strategist Michael Hartnett recently told Bloomberg that — if this index were to decline 6% and fall to a range of 5,600 to 5,700 points — Trump may stage a “fiscal intervention” and potentially review some of his more controversial policies.

Even diehard Bitcoiners are admitting that there might be downside volatility in the near future, even if longer-term prospects look bright. Jack Mallers, CEO of Zap, said on a recent podcast:

“I think in the short-term, I expect volatility. In the medium to long-term, I expect bullish … I would not be surprised if we dipped. I think Trump and his new administration have some things to work out with the Fed, we’ve seen some weak economic data, some concerns … Trump is inflationary. If you’re going to rebuild America, here, in the country, it’s going to take a lot of money that we don’t have. It’s inflationary — you’re gonna have to print money.”

Inflationary pressure could in turn work well for Bitcoin, not least because it has a fixed supply of 21 million coins.

With a gloomy economic picture and a frustrating lack of progress on pro-crypto policies — not to mention some breathtakingly large hacks — things may get worse for BTC before they get better.

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