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It was a highly volatile week in the cryptocurrency market. After the support that had held for the past few weeks was broken, the price dropped below the $80,000 mark. However, an announcement on Sunday about a federal strategic cryptocurrency reserve in the United States pushed the price back up to nearly $96,000. This momentum was short-lived, though. The threat of tariffs is once again weighing on the markets since their announcement yesterday.
Bitcoin and Ethereum saw a sharp increase of more than 10% in a single day following President Donald Trump’s announcement confirming their inclusion in a future U.S. strategic cryptocurrency reserve. Trump’s initiative initially caused confusion when he posted a message on Truth Social mentioning only XRP, Solana, and Cardano as key assets in this reserve while omitting Bitcoin. This omission surprised many observers, given Bitcoin’s importance in the cryptocurrency landscape. However, shortly after, Trump clarified the situation in a second message, confirming that Bitcoin and Ethereum would indeed be part of the project. In his statement, Trump emphasized that these two cryptocurrencies, along with other digital assets deemed strategic, would form the core of this national reserve. He also expressed his enthusiasm for Bitcoin and Ethereum, reinforcing the idea that his administration seeks to integrate cryptocurrencies into a broader financial strategy. Following this clarification, the markets reacted enthusiastically, not only for Bitcoin and Ethereum but especially for the three initially mentioned cryptos. XRP surged by 35% to $2.92, Solana jumped 24% to $175, while Cardano skyrocketed 68% to $1.07, significantly outperforming other assets.
The cryptocurrency markets suffered a sharp correction after the implementation of new tariffs imposed by Donald Trump on Canadian and Mexican imports. Bitcoin fell by 10%, trading at $83,704, while Ethereum lost 14.7%, reaching its lowest level since November 2023 at $2,082. This drop erased the recent gains that followed Trump’s announcement of a national cryptocurrency reserve the previous weekend. The GMCI 30 index, which tracks the performance of the top 30 cryptocurrencies, also declined by 14%, illustrating widespread caution in the market. This downturn in digital assets comes amid an uncertain economic backdrop, marked by concerning macroeconomic indicators. The ISM PMI index for February showed a contraction in economic activity, with a collapse in new orders and employment, while prices surged. Furthermore, the Atlanta Fed’s forecast for real GDP growth in the first quarter was revised downward to -2.8%, fueling recession fears. These factors contributed to a retreat in risk assets, including cryptocurrencies.
The impact of Trump’s new protectionist taxes was particularly noticeable in financial markets. The United States officially imposed 25% tariffs on imports from Canada and Mexico, as well as a 10% increase in tariffs on Chinese products, raising the rate to 20%. According to several analysts, these measures have heightened investor risk aversion, leading to the liquidation of volatile assets such as Bitcoin and Ethereum. Some observers also fear trade retaliation from the targeted countries, which could further worsen the climate of uncertainty. Moreover, capital flows into cryptocurrency-related financial products showed signs of slowing down. Bitcoin exchange-traded funds (ETFs) recorded net outflows of $74.19 million on Monday, after posting positive inflows of $94.34 million the previous Friday. Similarly, Ethereum ETFs saw their eighth consecutive day of capital outflows, with a decline of $12.1 million.
Coinbase CEO Brian Armstrong reacted to Donald Trump’s announcement about creating a strategic cryptocurrency reserve in the United States. According to him, Bitcoin would be the simplest and most logical option, as it is the natural successor to gold. However, he mentioned that an alternative could be a market-cap-weighted index of cryptocurrencies to ensure a neutral approach. Armstrong noted that he was still forming his opinion on the best asset allocation. His statement came after Trump confirmed that his reserve would include Bitcoin and Ethereum while instructing his crypto task force to consider adding Solana, XRP, and Cardano. However, Arthur Hayes, co-founder and former CEO of BitMEX, downplayed the importance of this announcement, stating that it remained purely theoretical as long as no congressional budget authorization was secured to fund such acquisitions. Meanwhile, Changpeng Zhao, founder of Binance, urged caution in overreacting to these statements. He suggested that additional cryptocurrencies could be added to the reserve over time and that other countries would likely follow the U.S. initiative. For him, this announcement signals a positive step toward institutional adoption of cryptocurrencies, although it is still in its early stages.
The recent decline has led Bitcoin to test a key technical support zone, aligned with the 200-day simple moving average (SMA 200), an indicator generally associated with long-term bullish trends. Analyst Daan Crypto Trades highlights the importance of this level for buyers, noting that such deep corrections are rare in major bullish cycles. Despite this downward pressure, the crypto community remains watchful for potential technical rebounds. Finally, the Bitcoin futures market experienced a major adjustment, with the closure of a record gap on CME contracts, a phenomenon often observed during significant corrections. This correction also filled a gap left since November 2024, bringing Bitcoin back to levels unseen in months, around $78,000. Investors are now awaiting the next announcements from the White House’s crypto summit on March 7, which could influence market direction.
The recent cryptocurrency market downturn has been primarily driven by the massive sale of Bitcoin by short-term investors. According to CryptoQuant data, about 55,000 BTC, nearly $4.6 billion, were sent to exchanges at a loss within just 24 hours. This trend intensified after Bitcoin fell below the $80,000 mark, a level it had not reached since November. In the preceding days, BTC sales by these investors were even more pronounced, with 80,000 BTC moved on Wednesday and 65,000 BTC on Thursday. In contrast, long-term holders were significantly less active, with their total Bitcoin holdings increasing by 47,000 units since mid-February. However, according to Ruslan Lienkha, an analyst at YouHodler, these long-term investors began taking profits as early as December, indirectly contributing to the selling pressure that prevented Bitcoin from surpassing $110,000. This situation was exacerbated by recent events, including the hacking of the Bybit platform and trade tensions related to Trump’s new tariffs, forcing short-term investors to liquidate their positions.
The panic among these investors is evident in market indicators. Currently, about 4.6 million BTC are held at a loss, and the short-term investor MVRV ratio has fallen to 0.89, indicating a high level of distress. In contrast, long-term holders who accumulated before Trump’s election remain largely in profit, with an MVRV ratio of 3.59. This imbalance between the two investor categories has been a key factor in recent price movements. According to Markus Thielen, CEO of 10x Research, approximately 70% of recent Bitcoin sales have come from investors who bought at unfavorable levels, particularly after Trump’s inauguration in January. Conversely, those who accumulated BTC before his election in November 2024 are holding onto their assets, which limits selling pressure on their end. The ratio between long-term and short-term investors has fallen to a three-year low of 0.92 after the recent correction, suggesting that volatility could persist before the market stabilizes.
The International Monetary Fund (IMF) is imposing new restrictions on El Salvador as part of its $1.4 billion financing agreement. The institution requires the country’s public sector to cease any voluntary Bitcoin accumulation. Additionally, the Salvadoran government can no longer issue debt or financial instruments backed by Bitcoin. These conditions align with the IMF’s goal of limiting the country’s involvement in the cryptocurrency economy in exchange for financial support. Méndez Bertolo, the IMF’s executive director for El Salvador, stated that this program aims to strengthen governance, transparency, and economic stability. In this context, amendments to the Bitcoin Law have been adopted, removing its status as legal tender and making its use entirely optional. Tax payments must now be made exclusively in U.S. dollars, while the state will reduce its involvement in Bitcoin-related projects.
Finally, it should be noted that BlackRock, the world’s largest asset manager, has announced the integration of its Bitcoin ETF, iShares Bitcoin Trust (IBIT), into a limited portion of its Target Allocation with Alternatives model portfolios. Designed for investors with a higher risk tolerance, these portfolios diversify their allocation across stocks, bonds, and liquid alternative investments. The share allocated to IBIT will remain modest, between 1% and 2%, but this decision marks another step forward in integrating Bitcoin into traditional investment strategies. This move could boost demand for the ETF and confirms the growing interest of institutional finance in digital assets. BlackRock, once skeptical about cryptocurrencies, now appears convinced of Bitcoin’s potential, as reflected in the evolving stance of its CEO, Larry Fink. According to Sumit Roy, an analyst at ETF.com, this inclusion represents another step toward Bitcoin’s mainstream adoption as an investment asset, though its immediate impact on fund inflows remains uncertain. Launched in January 2024 alongside other Bitcoin ETFs, IBIT reached $60 billion in assets under management faster than any other ETF in industry history. However, recent market volatility has led to massive withdrawals, with over $1 billion exiting the fund in the past seven days. Despite this, IBIT remains the dominant player in the Bitcoin ETF market, holding three times more assets under management than its closest competitors.
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 March 4th, 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.
