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The cryptocurrency market has experienced a significant correction, with Bitcoin dropping 6% in 24 hours to reach $89,350 at the time of writing. Its price briefly touched a yearly low below $88,000. Other major cryptocurrencies also suffered losses: Ether declined by over 10%, while Solana fell nearly 13%. This broad-based decline is attributed to uncertainty in financial markets, amplified by Donald Trump’s announcement of new tariffs on Canada and Mexico.
The impact of this announcement was felt beyond the crypto market. Geoffrey Kendrick of Standard Chartered pointed out that the growing risk aversion in traditional markets is also affecting digital assets. The Crypto Fear and Greed Index, a key market sentiment indicator, has dropped to its lowest level in five months. Additionally, the average purchase price of Bitcoin ETFs since the U.S. election is around $96,500, meaning that many investors are now in a losing position.
Despite the current bearish pressure, some analysts see encouraging prospects in the medium term. Kendrick believes that lower U.S. bond yields, driven by weaker economic data, could support a Bitcoin rebound. Markets are also closely monitoring the upcoming release of the U.S. Personal Consumption Expenditures (PCE) index, a key inflation indicator for the Federal Reserve. If inflation slows toward the Fed’s 2% target, interest rate cuts could fuel a recovery in the crypto market. Otherwise, selling pressure may intensify, extending the current downtrend. Some analysts argue that this correction could be healthy for the market, eliminating overly leveraged positions. With the recent regulatory review of the crypto market by the U.S. presidential task force, new regulatory clarifications could emerge, influencing investor sentiment. In the short term, Bitcoin could prove more resilient than other risk assets, although uncertainty remains over the overall market outlook.
Exchange-traded funds (ETFs) backed by Bitcoin have seen massive capital outflows in February, reaching nearly $929 million in just three weeks. This bearish trend contrasts with record highs set by the S&P 500 and gold. Bitcoin ETFs saw major outflows yesterday, with over $516 million withdrawn in a single day, marking the fifth-largest withdrawal wave since their launch in January 2024. Fidelity was the hardest hit, with $247 million in outflows, followed by BlackRock and Grayscale. This trend extends a five-day streak of net outflows totaling $1.07 billion. The situation worsened with the Bybit hack, which resulted in the loss of over $1.4 billion in Ethereum and other tokens—one of the largest thefts in crypto history. Although the platform managed to cover most of the shortfall, the market impact was immediate, pushing Bitcoin below $94,000, which had previously been a strong support level. Additionally, initial optimism surrounding the Trump administration’s stance on crypto has faded. The White House remains vague on the idea of creating a strategic Bitcoin reserve, dampening hopes of strong institutional support.
The U.S. Securities and Exchange Commission (SEC) has agreed to drop its lawsuit against Coinbase, pending official approval from the regulatory body. Coinbase CEO Brian Armstrong hailed this decision as a major victory, accusing the SEC of using unjustified aggressive tactics against the crypto industry. He also accused the agency of trying to stifle the sector in the U.S. by misapplying the law. The case dates back to June 2023, when the SEC filed a 100-page lawsuit against Coinbase, alleging that it had operated an unregistered securities exchange for a decade. The authority cited several specific cryptocurrencies, including Solana, Polygon, and Cardano, in its allegations. Around the same time, the SEC also sued Binance, the world’s largest crypto exchange, for similar violations of securities laws. More recently, Binance and the SEC jointly requested a 60-day pause in their legal dispute due to the creation of a new crypto-focused task force under Commissioner Hester Peirce. This initiative could alter the SEC’s regulatory approach and pave the way for a more favorable resolution of ongoing cases. Armstrong has long argued that Coinbase attempted to cooperate with the SEC by seeking to register in compliance with existing rules. However, he denounced the process as a “false opportunity,” claiming that every crypto company that tried to comply faced a dead end. This SEC reversal could mark a turning point in U.S. crypto regulation.
Ken Griffin, once a fierce critic of cryptocurrencies, has changed his stance and is positioning Citadel Securities in the crypto trading market. After years of skepticism, the market-making firm now plans to provide liquidity services on platforms such as Coinbase, Binance, and Crypto.com. This move comes in the context of a more favorable regulatory environment under the Trump administration, notably with the appointment of Hester Peirce to lead a crypto task force. Griffin, who previously called the Biden-era regulatory approach “malicious,” welcomes this new direction. Citadel Securities, which processes over $500 billion in daily trades and accounts for nearly 35% of U.S. stock trading volume, is also looking to establish teams outside the country. While its entry into the market may not immediately transform crypto liquidity, it represents a major shift toward institutional adoption of digital assets.
Strategy, formerly MicroStrategy, has expanded its Bitcoin holdings by acquiring an additional 20,356 BTC for a total of $2 billion at an average price of $97,514 per unit. This purchase brings its total holdings to 499,096 BTC, valued at over $47 billion. With this acquisition, the company holds approximately 2.3% of Bitcoin’s total supply, making it one of the largest institutional holders of the asset. This acquisition was funded through a recent $2 billion zero-coupon convertible note offering, allowing investors to buy up to an additional $300 million in notes. This latest transaction marks Strategy’s fifth-largest Bitcoin purchase, following a temporary pause in its buying spree. However, the company has warned of potential risks related to its Bitcoin holdings, particularly if the asset’s market value experiences a significant drop. In its latest annual report, it highlighted that its traditional business in analytics software did not generate positive cash flow in 2024 and that unrealized gains on Bitcoin could be subject to unexpected tax liabilities.
Saylor is also advocating for the creation of a strategic Bitcoin reserve in the U.S., suggesting that the country could acquire up to 20% of Bitcoin’s total supply “for free.” According to him, purchasing 4 to 6 million BTC would be enough to pay off the entire national debt and strengthen the dollar. He warns that if the U.S. does not act, other nations such as China, Russia, or Saudi Arabia could move ahead with such an initiative. This idea aligns with legislative initiatives in some U.S. states, such as Utah, which is exploring the possibility of a Bitcoin fund. This proposal comes shortly after Donald Trump signed an executive order to study the creation of a federal Bitcoin reserve. Currently, the U.S. government holds around 183,000 BTC, nearly 1% of the total supply, while the UK and Germany also possess significant amounts. Strategy, for its part, holds over 430,000 BTC, making it the largest Bitcoin reserve owned by a publicly traded company. Despite these trends, no major tech giant, including Microsoft, has adopted Saylor’s strategy, despite his efforts to persuade companies to accumulate Bitcoin. However, critics question the feasibility and relevance of such a project. Economists such as Christian Catalini from MIT argue that Bitcoin does not meet the criteria for a reserve asset, unlike the dollar or oil, which are used to stabilize economies and respond to crises. He also warns that if the U.S. started amassing Bitcoin on a large scale, it might be perceived as a hedge against the dollar, raising concerns and giving rivals like China or Russia an opportunity to claim that the U.S. no longer trusts its own currency.
Some technical analysts, such as Alistair Milne, point out that Bitcoin has entered oversold territory on the RSI indicator, a signal historically associated with potential price reversals. Milne notes that such oversold levels occur only a few times per year and often mark major market bottoms. Despite selling pressure, certain support levels remain intact. In January, Bitcoin briefly fell into the $80,000 range before rebounding around $89,200, a threshold that has since strengthened as a key support zone. According to CryptoQuant, “new whales”—investors holding Bitcoin for less than six months—have an average acquisition price of approximately $89,200, making it an important psychological and technical barrier. Finally, liquidity trends on exchange order books suggest that the $86,000 level could serve as a potential reversal point.
Notably, the Rivemont crypto fund had sold its SOL position last week and is now fully exposed to Bitcoin.
The presented information is as of February 25th, 2025, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
