LONDON — The cryptocurrency market is facing a sharp correction this week, with Bitcoin (BTC) dropping below $90,000 for the first time in months and altcoins following suit. The global market capitalization has seen a steep decline, erasing over $800 billion in value, as macroeconomic uncertainty, regulatory developments, and security concerns weigh on investor sentiment.
Bitcoin Drops Below $90K Amid Market Sell-Off
As of February 26, 2025, Bitcoin (BTC) is trading at $87,258, with an intraday high of $89,409 and a low of $85,411. This represents a significant drop from its all-time high of $109,000 in January 2025, marking a correction of over 20% in just over a month.
Market analysts attribute the downturn to several key factors:
Macroeconomic Uncertainty: Investors are reacting to concerns over inflation, Federal Reserve policy, and U.S. trade tensions. The recent confirmation of tariffs on Mexico and Canada has fueled fears of rising costs and economic instability, leading to risk-off sentiment across financial markets.
Profit-Taking by Institutional Investors: After Bitcoin’s parabolic rally to over $100,000 in early 2025, some large institutional holders have started to lock in profits, triggering a cascade of sell orders.
Regulatory Developments: The U.S. Securities and Exchange Commission (SEC) has maintained pressure on crypto firms, despite recent approvals of Bitcoin ETFs. While the ETF launch initially fueled bullish momentum, ongoing investigations into major exchanges have dampened optimism.
Security Breaches: The recent $1.5 billion hack on the Bybit exchange has raised concerns about the security of centralized platforms, prompting some investors to pull funds from exchanges.
"Bitcoin’s price action is a classic post-bull-run correction," said Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence. "With macroeconomic uncertainty and regulatory scrutiny, we’re seeing a cooling-off period that was inevitable after such rapid gains."
Altcoins and DeFi Tokens Take a Bigger Hit
Altcoins have suffered even steeper losses than Bitcoin. Ethereum (ETH), the second-largest cryptocurrency, has dropped below $2,400, marking a 15% decline in the past seven days.
Other major altcoins have seen similar declines:
Solana (SOL): Down 18%, currently trading at $92
Cardano (ADA): Fell 20%, sitting at $0.48
Binance Coin (BNB): Dropped below $300, down 14%
The Decentralized Finance (DeFi) sector has also experienced a significant pullback, with total value locked (TVL) in major DeFi protocols declining by over 10% in a single week. Liquidations of leveraged positions across exchanges have contributed to the $2 billion in crypto market liquidations in the past 24 hours.
"When Bitcoin corrects, altcoins tend to amplify those losses," said Lark Davis, a prominent crypto analyst. "This is nothing new. We've seen it in every market cycle."
Institutional Activity and ETF Inflows Slowing Down
Despite the downturn, institutional interest in Bitcoin and crypto remains strong, though ETF inflows have slowed compared to previous weeks.
BlackRock's iShares Bitcoin ETF has amassed over $10 billion in assets under management (AUM) but saw its first net outflows last week, indicating some short-term selling pressure.
Grayscale’s Bitcoin Trust (GBTC) continues to see redemptions, as investors move funds into lower-fee ETF alternatives.
MicroStrategy (MSTR), one of the largest corporate Bitcoin holders, has seen its stock price decline in tandem with BTC’s pullback but has not announced any sales.
Despite short-term headwinds, long-term institutional adoption remains intact, according to industry experts.
"This is a natural market cycle," said Cathie Wood, CEO of ARK Invest. "The broader trend of institutional accumulation is still in play."
Regulatory and Security Concerns Adding Pressure
The market is also feeling the weight of continued regulatory uncertainty and security risks:
The SEC recently closed its investigation into Robinhood’s crypto business without enforcement, but ongoing scrutiny of Binance, Coinbase, and other exchanges remains a concern.
Senator Elizabeth Warren’s new legislative push to regulate cryptocurrency mixers and exchanges has raised fears of stricter compliance requirements.
The Bybit hack, one of the largest in recent history, has prompted concerns about security on centralized exchanges, leading some investors to move funds to self-custody wallets.
"The market doesn’t like uncertainty," said Jake Chervinsky, a crypto regulatory expert. "Until we have clear frameworks, volatility will continue."
What’s Next for the Market?
With Bitcoin down over 20% from its peak, many traders are wondering whether the market is in the midst of a deeper correction or just a temporary dip before another rally.
Key Factors to Watch:
Bitcoin’s ability to hold support at $85,000 – If BTC falls below this level, analysts warn that a further drop to $80,000 or lower could be in play.
ETF inflows vs. outflows – Continued institutional interest through Bitcoin ETFs will be a critical indicator of sentiment.
Macro trends – Federal Reserve rate decisions and inflation data will continue to impact risk assets, including crypto.
Despite the current downturn, some investors see this as a buying opportunity.
"We’ve been here before," said Scott Melker, a well-known crypto trader. "Every time Bitcoin corrects, people panic, and then months later, we’re talking about new all-time highs."
Final Thoughts
The cryptocurrency market is experiencing a sharp correction, with Bitcoin and altcoins facing substantial losses amid economic uncertainty, regulatory scrutiny, and security concerns.
While short-term volatility remains high, long-term fundamentals—institutional adoption, Bitcoin ETFs, and mainstream crypto integration—suggest that the market could recover in the coming months. As always in crypto, history shows that sharp declines often precede even stronger rallies.
For now, investors are watching support levels, regulatory developments, and institutional moves to gauge what’s next in this unpredictable market.