Bitcoin has entered a corrective phase, falling below $80,000 and losing nearly 37% from its peak of $109,000 reached in January. This sharp decline has affected the entire cryptocurrency market, erasing the gains made in 2025.
The Crypto Fear and Greed Index has dropped to 10, indicating “Extreme Fear,” the lowest level seen in two years.
One of the main drivers of this downturn is the escalating trade tensions between the United States and several of its key trading partners, including China, Canada, and Mexico. President Trump’s announcement of new tariffs on imports from these countries created significant market disruption.
Additionally, Trump threatened to impose a 25% tariff on European Union goods, accusing the bloc of unfair trade practices against the U.S. The U.S. president also revealed plans to double tariffs on Chinese imports and introduce new tariffs on Canada and Mexico starting March 4.
These trade disputes have raised concerns about broader economic implications, negatively affecting market sentiment, including Bitcoin’s price.
Bitcoin fell below its 200-day moving average, resulting in a 16% weekly loss. The price briefly dropped below the $80,000 mark for the first time since November 10, driven by concerns over the U.S. dollar’s demand due to the new trade tariffs.
Data from Glassnode shows that short-term Bitcoin holders realized significant losses, totaling $2.16 billion over the past three days. Those who had bought Bitcoin in the past week incurred the largest losses, totaling $927 million, accounting for nearly 43% of the total.
Other holders, including those who invested within a month, also experienced heavy losses, with $678 million lost by those holding for one week to one month and $257 million lost by those holding for up to a year.
The growing number of withdrawals has put considerable pressure on U.S.-based Bitcoin Exchange-Traded Funds (ETFs). According to Coinglass, 11 Bitcoin funds saw a combined net outflow of $938 million, marking the sixth consecutive day of withdrawals.
The Fidelity Wise Origin Bitcoin Fund (FBTC) recorded the largest loss, with $344.7 million withdrawn, setting a new record for ETF outflows. Other funds, such as BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale’s Bitcoin funds, also faced significant withdrawals, further exacerbating the market downturn.
Adding to the market correction, the $1.49 billion hack of the Bybit exchange caused further damage. Bitcoin’s price fell from nearly $100,000 to $97,370 after the hack, although it made a slight recovery to around $96,000 by Monday.
Bitcoin’s price continued to follow a downward trend, worsened by Trump’s comments about trade restrictions. The Fear and Greed Index dropped to 10, signaling extreme fear among investors, its lowest level since June 2022.
Historically, extreme fear has often signaled an overreaction by investors and a potential buying opportunity. Market indicators suggest that Bitcoin may fall as low as $70,000 before stabilizing, and Arthur Hayes, co-founder of BitMEX, has warned that such periods of extreme fear often precede market rebounds.
In conclusion, Bitcoin’s recent price correction is largely due to a mix of external factors, including rising trade tensions and the fallout from the Bybit hack. While the market remains volatile and investors have suffered significant losses, the extreme fear currently reflected in investor sentiment could present a buying opportunity for those willing to endure the uncertainty.
As the market stabilizes, Bitcoin’s future performance will depend on broader economic developments and shifts in investor sentiment.
