Bitcoin (BTC) has sharply declined, breaking below the critical $90,000 threshold for the first time since mid-November — a stark reversal from its recent rally toward all-time highs. The drop, which unfolded on February 25, 2025, has sparked renewed debate about market sentiment, macroeconomic influences, and the future trajectory of the leading cryptocurrency.
👉 Discover how global economic shifts are impacting Bitcoin’s price right now.
This article explores the key drivers behind the downturn, analyzes expert forecasts, and evaluates whether this correction marks a temporary setback or the beginning of a deeper bearish phase.
Why Did Bitcoin Crash Below $90,000?
The recent decline in Bitcoin’s price is not the result of a single factor but rather a confluence of macroeconomic pressures and crypto-specific dynamics. Analysts point to five primary forces that collectively triggered the sell-off.
1. Trump’s Tariff Announcement Fuels Market Uncertainty
One of the most immediate catalysts for the drop was former U.S. President Donald Trump’s announcement of new tariffs. On February 24, during a joint press conference with French President Emmanuel Macron, Trump confirmed his administration’s plan to impose a 25% tariff on imports from Canada and Mexico. Additionally, a proposed 10% tariff on Chinese goods further intensified trade tensions.
These protectionist measures have revived concerns about global economic fragmentation and inflationary pressures — both of which historically weigh on risk assets like Bitcoin. While cryptocurrencies were once seen as “digital gold” insulated from traditional markets, they are increasingly vulnerable to macro-level policy shifts.
2. Growing Correlation With Traditional Financial Markets
Bitcoin’s price behavior is becoming more aligned with traditional equities, particularly technology stocks. Bitfinex analysts noted that over the past five trading sessions, the S&P 500 fell by 2.3%, while the Nasdaq dropped 4%. This broader market weakness has spilled over into crypto, reinforcing Bitcoin’s status as a risk-on asset.
Further dampening sentiment, reports suggest the Trump administration is seeking to tighten export controls on semiconductor technologies to China — including restrictions on NVIDIA chips and equipment maintenance. These moves could disrupt global tech supply chains and undermine investor confidence in high-growth sectors.
3. Weakening Institutional Demand
A significant contributor to the downturn is the slowdown in institutional demand for Bitcoin through spot exchange-traded funds (ETFs). According to Bitfinex data, Bitcoin ETFs experienced $552.5 million in net outflows during the week ending February 21.
This outflow trend indicates that large investors may be taking profits or reallocating capital amid heightened uncertainty. The once-strong momentum behind ETF inflows — which helped propel Bitcoin above $100,000 earlier in the year — appears to be stalling.
👉 See how institutional flows are shaping the next phase of crypto markets.
4. Arthur Hayes Warns of a “Goblin Town” Scenario
Former BitMEX CEO Arthur Hayes amplified bearish sentiment with a post on X (formerly Twitter) on February 25, warning of an impending “Goblin Town” event — a term he uses to describe a violent price collapse.
Hayes identified hedge funds holding positions in BlackRock’s iShares Bitcoin Trust (IBIT) as potential triggers. These funds are reportedly long on IBIT while shorting CME Bitcoin futures. As BTC prices fall, the basis (the spread between spot and futures prices) narrows, prompting these traders to unwind their positions by selling IBIT shares and buying back futures.
This rebalancing could create a self-reinforcing downward spiral, potentially driving Bitcoin down to $70,000, according to Hayes.
5. Market Consolidation and Lack of Momentum
After nearly 90 days of trading within a narrow range between $91,000 and $102,000, Bitcoin appears to be undergoing a period of market consolidation. Bitfinex analysts observe that this prolonged sideways movement reflects a lack of sustainable upward momentum.
“The momentum required for a sustained breakout has been absent, leading most major crypto assets into a phase of contraction and consolidation.”
This stagnation, combined with external headwinds like rising tariffs and weakening consumer sentiment, left Bitcoin vulnerable to sharp downside moves — exactly what unfolded in late February.
What Does This Mean for Bitcoin’s Future?
While short-term sentiment has turned cautious, many analysts view this pullback as part of a broader maturation process for digital assets. The era of relentless upward price action driven by speculation may be giving way to a more nuanced market shaped by fundamentals, regulation, and macroeconomic integration.
That said, key support levels will be closely watched. A sustained hold above $80,000 could signal resilience and set the stage for a recovery. However, if selling pressure continues and Hayes’ $70,000 target is tested, it could trigger further deleveraging across leveraged positions in both spot and derivatives markets.
Frequently Asked Questions (FAQ)
Q: What caused Bitcoin to drop below $90,000?
A: The decline was driven by a mix of macroeconomic factors — including Trump’s proposed tariffs — weakening institutional demand for Bitcoin ETFs, increased correlation with stock markets, and technical positioning risks highlighted by Arthur Hayes’ “Goblin Town” warning.
Q: Is Bitcoin still correlated with stock markets?
A: Yes. Despite early narratives of decoupling, Bitcoin has shown growing correlation with risk assets like the Nasdaq and S&P 500, especially during periods of macroeconomic stress or policy uncertainty.
Q: Could Bitcoin really fall to $70,000?
A: While not guaranteed, such a move is plausible under stressed conditions — particularly if ETF outflows accelerate and hedge funds unwind leveraged basis trades between spot ETFs and futures contracts.
Q: Are Bitcoin ETFs losing investor interest?
A: Recent data shows net outflows, suggesting some cooling in institutional appetite. However, long-term adoption trends remain positive, and any renewed inflow momentum could quickly reverse sentiment.
Q: What should investors do during this correction?
A: Investors should assess their risk tolerance, avoid emotional decisions, and consider dollar-cost averaging. It’s also wise to review portfolio allocations and consult independent financial advice before making moves.
Q: Does this mean the bull run is over?
A: Not necessarily. Corrections are normal in strong bull markets. The fundamentals — including growing adoption, regulatory clarity in some regions, and limited supply — still support long-term upside potential.
👉 Explore strategies for navigating volatile crypto markets with confidence.
Final Thoughts
Bitcoin’s fall below $90,000 underscores the evolving nature of cryptocurrency markets — no longer isolated experiments in digital scarcity but integral components of the global financial system. While volatility remains high, understanding the interplay between macro policy, institutional flows, and market psychology is essential for navigating this new era.
As the market digests recent shocks and recalibrates expectations, one thing remains clear: Bitcoin’s journey is far from over. Whether it rebounds swiftly or enters a prolonged consolidation phase will depend on how these complex forces continue to unfold in the months ahead.
Note: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, including the potential loss of principal. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.