Bitcoin Drops Below $90K: ETF Outflows and Turmoil in the Market

Bitcoin Slips Below $90,000 Amid ETF Outflows and Market Uncertainty

Bitcoin’s recent dip beneath the $90,000 threshold for the first time since November 2024 has sent shockwaves through the market, reigniting concerns about the strength of the current rally. Investors, already grappling with sustained outflows from U.S. spot Bitcoin exchange-traded funds (ETFs), now face a market environment shaped by a complex mix of geopolitical and economic headwinds.

A Steady Decline Fueled by ETF Sell-Offs

On February 25, Bitcoin (BTC) hit a low of $87,629, marking its weakest level in over three months. The drop coincided with another intense selling phase in U.S.-based Bitcoin ETFs, which recorded over $516 million in net outflows on February 24 alone. This exodus from ETFs has been consistent for six straight trading sessions, with data from Farside Investors painting a picture of a market struggling to regain momentum.

The sustained ETF sell-off, which began on February 18, has ultimately shaved off more than 6.2% from Bitcoin’s price within just six days. Moreover, total net outflows over the two weeks leading up to February 21 surpassed $1.14 billion—a staggering sum marking the most significant withdrawal period since these ETFs started trading on January 11, 2024.

While political endorsements have provided Bitcoin with a degree of resilience, macroeconomic conditions continue to exert substantial pressure. According to Iliya Kalchev, a dispatch analyst at Nexo, the broader economic landscape remains a crucial determinant of Bitcoin’s performance. He explains:

“Elevated interest rates and reduced global purchasing power have led to a noticeable decline in both open interest and spot inflows, underscoring the inherent vulnerability of Bitcoin to broader economic pressures.”

Adding to this challenge is the ongoing strain in U.S.-China trade relations. Reports indicate that while former U.S. President Donald Trump expects Chinese President Xi Jinping to visit the U.S., there is no clear timeline for potential negotiations. This uncertainty has kept investors on edge, further muting enthusiasm for high-risk assets like Bitcoin.

Market Shock Deepens Following Crypto Liquidations and Hacking Incident

Beyond external macroeconomic pressures, the crypto industry has faced additional turmoil in recent days. On February 21, the market was rocked by the largest hack in crypto history when Bybit suffered a staggering $1.4 billion loss. This unprecedented breach significantly undermined investor confidence, contributing to increased market turbulence.

Consequently, crypto liquidations surged to $1.3 billion within a 24-hour period, impacting approximately 362,000 traders. Among these losses, Bitcoin alone accounted for $523 million in liquidations, further exacerbating its price decline, according to data from CoinGlass.

However, seasoned investors recognize that such corrections are not unusual. Raoul Pal, founder and CEO of Global Macro Investor, drew parallels to Bitcoin’s historical price behavior. In a February 25 post on X, he pointed out that the current downturn mirrors Bitcoin’s 2017 market structure, when the cryptocurrency saw five corrections of roughly 28%, each spanning two to three months.

While short-term volatility may unsettle some, historical trends suggest that Bitcoin has consistently navigated similar market cycles. Whether or not the asset can regain ground in the face of ETF outflows and macroeconomic uncertainties will depend on broader market sentiment and institutional investor behavior in the coming weeks.