What’s Causing Today’s Bitcoin Price Drop?

Bitcoin (BTCUSD) dropped below $87,000 on Tuesday—a significant decline from the $95,000 level seen just two days prior and the $100,000 range tested late last week—amid growing concerns surrounding economic uncertainty in the cryptocurrency markets.

Bitcoin is now approximately 20% lower since its all-time high of $109,000 last month, just before U.S. President Donald Trump’s inauguration.

Economic Factors Impacting Bitcoin

After remaining relatively stable in previous weeks, bitcoin’s recent plunge may be connected to increasing fears regarding U.S. economic indicators, particularly inflation and trade policies.

During a press conference on Monday, Trump reaffirmed that tariffs on Mexico and Canada will proceed as planned. Economists have long been concerned that such tariffs could reignite inflation. Crypto investors are also monitoring the inflation data set for release on Friday, known as the core Personal Consumption Expenditures (PCE), which is the Federal Reserve’s favored metric, following a January Consumer Price Index (CPI) that was higher than anticipated.

Ongoing inflation may hinder the Fed’s ability to aggressively reduce interest rates, a scenario that could negatively affect investors in risky assets like cryptocurrencies and stocks. Elevated rates suggest higher yields on safer Treasuries, which in turn has unsettled both the equity and crypto markets.

What Actions Should Investors Consider?

Is this a moment for investors to capitalize on lower bitcoin prices? According to Standard Chartered’s Global Head of Digital Assets Research, Geoff Kendrick, the answer is no.

“Avoid buying the dip for now; a drop into the low $80s is likely,” Kendrick stated in a research note reported by Coindesk on Tuesday, further suggesting that “before buying becomes attractive, we may experience a $1B [exchange-traded fund] outflow day.”

On Monday, investors withdrew funds from spot bitcoin exchange-traded funds (ETFs), with net outflows amounting to $539 million, as reported by data from Farside Investors. This represents the second-highest outflow recorded in 2025 and the fifth-largest outflow since these ETFs began trading in January last year.

Kendrick and digital asset manager Bitwise had previously forecasted bitcoin could surpass $200,000 by 2025.

Are Memecoins Coming to an End?

Non-bitcoin cryptocurrencies have experienced even steeper losses than bitcoin since Inauguration Day. For instance, Solana (SOLUSD), a platform heavily associated with the memecoin trend this cycle, has seen its price nearly halved since Trump took office. Recent controversies in the memecoin market have led some analysts to suggest that this cryptocurrency fad could be reaching its conclusion.

“What the crypto market is currently processing is the end of the memecoin boom,” stated Bitwise Chief Investment Officer Matt Hougan on X Tuesday, noting that the excitement surrounding tokens like Melania and Libra might “kill” the memecoin trend within six months.

Over the last 24 hours, the Libra token has dropped by approximately 20%, the Melania token has decreased by 23%, and the Trump token has fallen by 11%, according to Coinmarketcap.