The Bitcoin market has seen a sharp decline recently, with prices plummeting by over $12,000 in a matter of days. The current price has dropped to $84,570, down approximately 22.85% from the high in January. According to CoinGlass data, Bitcoin prices have fallen over 4% in the past three days, leading to the evaporation of more than $1 billion worth of leveraged long positions, reflecting the spreading panic in the market.
One of the triggers for this sell-off is President Trump's tariff threat. On Wednesday, Trump announced a 25% tariff on the European Union, which caused a strong reaction in the market, leading to global stock market turbulence. Although Nvidia's better-than-expected earnings report provided some support for the U.S. stock market, overall market sentiment was still dragged down by Trump's tariff policy. The U.S. stock market barely held steady, while the gold market fell by 2.2% in two days, and investors flocked to U.S. Treasury bonds for safety.
Compared to traditional safe-haven assets like gold, Bitcoin is more volatile, and due to its decentralized nature, it often becomes a target for selling when market uncertainty increases. This has put additional pressure on the Bitcoin market, especially against the backdrop of global tariff conflicts and U.S. restrictions on technology exports, causing investor confidence in market prospects to diminish rapidly.
According to data, as of February 25, U.S. Bitcoin ETFs have seen a cumulative net outflow of $1.14 billion, setting a historic record. Over the past six days, Bitcoin ETF funds have continuously flowed out, reaching a size of $2.24 billion, marking the longest period of fund outflow since June last year.
Geoff Kendrick, Global Head of Digital Asset Research at Standard Chartered Bank, warns that despite inflows of institutional funds over the past 12 months, digital assets still primarily rely on retail funds. Retail investors' financial strength is relatively weak, making them prone to significant losses in an unstable market. He further states that the market might face a larger-scale downturn, and investors should be wary of the potential risks involved.
As panic spreads, the future direction of the market remains uncertain, especially amid a complex global economic situation and ongoing trade frictions. The price fluctuations of Bitcoin may further intensify.
