Bitcoin has experienced its most significant monthly decline since June 2022, signaling its entry into a bear market as the initial excitement surrounding cryptocurrencies following Donald Trump’s election victory wanes.
In February, the price of bitcoin fell by 17.5%, marking the largest monthly decrease since June 2022, and ranking among its 11 worst months over the past decade, amid a wave of negative sentiment in financial markets.
The leading cryptocurrency closed February at approximately $84,252 (£67,010), having reached a three-month low of about $78,273 during trading on Friday.
Bitcoin is now more than 20% below its all-time high of $109,071 achieved in mid-January, placing it firmly in a technical bear market.
The cryptocurrency’s downfall has been attributed to increasing volatility in financial markets, fueled by concerns over a potential global trade conflict as Donald Trump announced plans to introduce new tariffs on imports from Canada, Mexico, and China this week.
Having initially surged due to the “Trump trade” that energized markets post last November’s election, cryptocurrency values tumbled as Wall Street stocks and the US dollar also weakened throughout February.
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Cryptocurrencies rallied following Trump’s election, fueled by speculation that the administration would adopt a pro-crypto stance and potentially establish a bitcoin strategic reserve.
However, that optimism has diminished as traders await clear pro-crypto regulatory guidelines from the Trump administration. The mood was further dampened by a cyberattack on the Bybit exchange, resulting in the theft of $1.5 billion in digital assets in February.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, remarked that the crypto market remains under pressure from pervasive negative sentiment.
“The bears are circling the crypto market, with values plunging 20% from their recent highs,” she said.
Streeter added, “Trump’s assertive trade policies have raised concerns among investors, prompting them to move away from riskier assets, and the significant hack of the Bybit exchange in Dubai has shaken confidence. Without any definitive actions from Trump demonstrating his support for the crypto sector, this unease is likely to persist.”
Bitcoin has bounced back from significant monthly declines before. In June 2022, its darkest month, it plummeted 41% from $31,700 to $18,700, only to rebound by 26% in July.
