After reaching record highs last year, Bitcoin is seeing a sharp decline, falling below $88,000 on Tuesday—a drop of more than 7%, marking its lowest point since November. The downturn comes as tariff concerns, economic uncertainty, and market volatility impact both cryptocurrencies and tech stocks.
Tariff Fears and Economic Worries Shake Crypto Markets
President Donald Trump has reaffirmed that tariffs on Canada and Mexico will proceed next week, sparking concerns about economic instability. Bitcoin initially surged past $100,000 following Trump’s election victory, with investors hopeful that his administration would bring crypto-friendly regulations. On the campaign trail, Trump positioned himself as a strong advocate for digital assets, pledging to make the U.S. the global crypto hub.
However, a decline in consumer confidence reported Tuesday accelerated the selloff in Bitcoin, Ethereum, Solana, and other major cryptocurrencies.
Paul Schatz, president of Heritage Capital, told media, “The ‘risk-on’ theme is now fully ‘risk-off’ as evidenced by bonds finally rallying as a safe haven along with consumer staples and utilities.”
“Crypto has held up remarkably well,” Schatz added. “I think too many people ran to it as a ‘safety’ play and are now being punished.”
Since Trump’s inauguration, Bitcoin has lost 20% of its value, as the post-election crypto enthusiasm begins to fade.
Eric Trump Urges Investors to “Buy the Dips”
Despite the downturn, Eric Trump attempted to rally investors, posting on X (formerly Twitter) Tuesday: “Buy the dips!!!”—with the letter “B” replaced by the Bitcoin symbol.
Many crypto investors are now looking for the next big catalyst in the market. Trump has appointed several crypto-friendly officials, including Paul Atkins as head of the Securities and Exchange Commission (SEC), leaving some hopeful that regulatory clarity could stabilize the market.
Congress Pushes for Crypto Regulation
There are signs that Congress may be gearing up to introduce digital asset legislation. In a recent op-ed, Reps. French Hill (R-Ark.) and Bryan Steil (R-Wis.) criticized Washington’s inaction on crypto regulation.
“Washington has been asleep at the wheel for far too long,” they wrote.
The lawmakers argue that effective legislation will allow innovative crypto projects to thrive in the U.S. while protecting consumers from fraud, rug pulls, and market manipulation.
Bybit Hack and Argentine Crypto Scandal Fuel Investor Anxiety
Security concerns have also rattled the crypto market. Bybit, a Dubai-based cryptocurrency exchange, recently suffered a record-breaking $1.5 billion hack, with security experts suspecting North Korea’s involvement.
Bybit co-founder and CEO Ben Zhou reassured customers, stating in a press release:
“Bybit fully backs all customer assets entrusted to our platform, maintaining a dynamic ratio of over 1:1. We are fortunate to have all-weather friends in a cutthroat industry—our peers and even competitors stood with us during challenging times, and our customers deserve the same level of commitment.”
Adding to investor unease, Argentine President Javier Milei is facing a corruption probe related to his endorsement of meme coin LIBRA. The token’s price skyrocketed after Milei posted about it on X, only to crash shortly after. He has since distanced himself from the project and denied any wrongdoing.
Bitcoin ETFs See Largest Outflows Since January 2024
Institutional investors are also retreating from Bitcoin. Data from LSEG reveals that Bitcoin-backed exchange-traded funds (ETFs) saw a net outflow of $644 million this month—the largest since the spot Bitcoin ETFs launched in January 2024.
Crypto analyst Michaël van de Poppe believes Bitcoin still has room to fall, writing on X:
“Ultimate bottom case? $83K–87K. Then we should be rotating upwards.”
Experts Warn of Further Declines but See Long-Term Potential
Heritage Capital’s Schatz predicts a 25%–50% drop in Bitcoin’s price this year but believes cryptocurrency still belongs in an average investor’s portfolio—just in moderation.
“The percentage allocation is somewhere in the single digits depending on risk tolerance,” Schatz advised. “I would not rush in. There are too many latecomers who need to be punished. [Bitcoin] sub-$80,000 looks like an interesting spot to commit money. I tell people to traffic in the big names and leave the garbage and memes to gamblers and spectators.”
As Bitcoin struggles to regain momentum, investors will be watching for regulatory developments, institutional sentiment, and macroeconomic factors to determine the market’s next move.
