Bitcoin (BTC) is falling sharply to reach lows of the beginning of November, leaving behind the bull run that boosted Donald Trump’s victory as a series of factors are causing risk-averse sentiment among investors.
The largest and longest-standing cryptocurrency declined just over 8% in a 24-hour period on Tuesday morning (EDT) to trade at a low of $87,190, its lowest price so far in 2025, before a modest recovery.
The larger cryptocurrency market replicated the bearish movement, with some major altcoins like Ether (ETH), XRP and Solana (SOL) recording even more severe price reversals of up to 15% in the period. ETH, the second largest cryptocurrency, fell just over 10% to below $2,400, while XRP and SOL racked up losses of 19% in the week.
The global capitalization of the cryptocurrency market fell back down below USD $3 trillion in a 9% drop in 24 hours to a level of USD $2.86 at the time of writing, according to CoinMarketCap.
At the same time, in the derivatives market, liquidations rose to $1.5 billion in this period affecting almost 390,000 individual traders. Of the total liquidations, the majority correspond to long positions, while only $121 million correspond to short positions, according to data from Coinglass.
Trump tariffs and economic instability
The price turmoil represents a clear setback since Bitcoin surged more than 50% after Trump’s victory to reach an all-time high of just over $109,000 in January as the Republican began his second term in the White House.
Notwithstanding Trump’s embrace of cryptocurrencies, political and economic uncertainty has been affecting the asset class in recent weeks. The US president’s announcement on Monday that he would proceed with tariffs on Canada and Mexico had an immediately negative impact on the market.
“Trump’s combative stance against geopolitical allies and rivals shakes investor confidence, and concerns about high inflation persist,” Bloomberg said in a report on Tuesday. The prospect of a longer-than-expected pause in rate cuts by the Federal Reserve this year contributes to the sentiment of aversion.
This has also impacted traditional markets, with the Nasdaq index and the S&P 500 falling in price by 1.4% and 0.5% earlier today. The Nasdaq 100 technology index has now lost almost 4% in the last 5 days, as per Google Finance.
Widespread risk aversion
Geoffrey Kendrick, global head of digital asset research at Standard Chartered, pointed out that the resulting risk-averse sentiment in traditional markets has affected the digital asset sector.
Investors’ diminished appetite for risk is reflected in the strengthening of the Japanese yen against the US dollar amid bets on further rate hike announcements by the Bank of Japan, as noted by CoinDesk.
For cryptocurrencies, this is mirrored in the Crypto Fear and Greed Index — a key market indicator that analyzes social media activity, volatility, trends and prices — which recently fell to a five-month low of 25.
Mixed scenario within crypto
Looking beyond macro factors, some industry developments are also fueling the bearish trend. The recent reluctance of a trio of US states to adopt Bitcoin reserves had a negative impact, according to a CoinDesk report.
In detail, three state-level proposals for Bitcoin reserves failed in Montana, North Dakota and Wyoming, the report noted, citing statements by analyst Valentin Fournier of BRN, saying the decision “underscores the political risks.” The creation of a Bitcoin reserve at the federal level has been one of the Trump promises most awaited by the crypto community.
A major hack of Bybit and the political scandal involving Javier Milei in Argentina over a Solana memecoin have not helped. The latest news has been especially devastating for Solana, who has faced a spiral of losses caused by the collapse of a handful of emerging meme tokens in his ecosystem.
Watch out for the correction in the immediate term
The outlook within the cryptocurrency world has been varied, with a series of favorable regulatory developments now that the US Securities and Exchange Commission (SEC) has chosen to drop litigation against companies and industry organizations. On Friday, Coinbase said that the SEC has agreed in principle to drop the lawsuit against it, an announcement that fueled a brief rise in the market before any gains were overshadowed by the nearly $1.5 billion attack on Bybit.
The digital currency market may see a reversal towards the end of the week in the face of the publication of key economic data for the FED in the United States, and several analysts anticipate a possible recovery in the medium term. However, for now, some investors recommend caution.
“Don’t buy the dip yet, a downward move of BTC to USD $80,000 is underway,” warned Kendrick.
BTC changed hands at around USD $89,200 amid a slight rally at the time of publication, down 18% from its all-time high last month.
