Bitcoin CRASHES Below $87K! Here’s What’s REALLY Happening .
Bitcoin Drops Below $87,000: Analyzing the Market Turmoil
On February 25, 2025, Bitcoin fell below $87,000, marking its lowest level since mid-November 2024. This unexpected downturn has raised concerns among investors and analysts. Several factors contributed to this decline, including political hesitations, macroeconomic conditions, and crypto market-specific events.
Key Reasons Behind Bitcoin’s Decline
1. U.S. States’ Reservations on Bitcoin Reserves
Several U.S. states, including Montana, North Dakota, and Wyoming, have expressed skepticism regarding Bitcoin reserve proposals. While former President Donald Trump recently reaffirmed his support for Bitcoin, state-level policymakers remain cautious about allocating taxpayer funds to Bitcoin investments.
Market analyst Valentin Fournier stated, “Despite federal optimism, state-level adoption has been sluggish. A potential national reserve strategy, possibly backed by bond issuance or partial gold reserve liquidation, could be a more viable approach.”
2. Global Money Supply Decline Impacts Bitcoin
Bitcoin's price movements have historically correlated with global liquidity trends. Since the beginning of 2025, global money supply has been shrinking, leading to reduced capital flows into risk assets, including Bitcoin.
Andre Dragosch, Research Director for Europe at Biwise, highlighted this trend on social media platform X, noting, “Bitcoin’s price typically lags behind global money supply trends. The recent liquidity contraction has weakened buying momentum.”
3. Synchronized Decline with U.S. Stock Market
The cryptocurrency market is increasingly influenced by traditional financial markets. The Kobeissi Letter reported a $325 billion decline in crypto market capitalization over the weekend, with $100 billion wiped out in a single hour on February 25, despite no major news events.
Bitcoin’s sell-off coincided with a drop in the S&P 500 index. Historically, Bitcoin has exhibited strong relative strength, but recent movements suggest an increasing correlation with traditional financial markets. Solana, which had surged during the meme coin craze, saw a 22% drop, further exacerbating liquidity issues.
4. Citadel Securities Enters the Crypto Market
Just hours before the Bitcoin dip, Citadel Securities, a $65 billion asset management firm, announced its intention to become a liquidity provider in the crypto market. Instead of boosting confidence, this move was perceived as a “sell the news” event, triggering panic selling.
5. Bybit Hack Shakes Market Confidence
On February 21, 2025, crypto exchange Bybit suffered a security breach, resulting in over $1.4 billion in stolen funds. This ranks among the largest financial thefts in history, surpassing the infamous $611 million PolyNetwork hack of 2021.
Arkham Intelligence described the attack as “the biggest financial theft since the $1 billion Central Bank of Iraq heist in 2003.” The Bybit hack not only impacted Ethereum but also dragged down the broader crypto market sentiment.
6. Sam Bankman-Fried (SBF) Resurfaces on Social Media
Adding to the chaos, Sam Bankman-Fried (SBF), the disgraced former CEO of FTX, returned to social media, making cryptic comments. His statements sparked fears of renewed regulatory scrutiny and potential market disruptions.
What’s Next for Bitcoin?
While the recent correction is alarming, it is important to contextualize it within Bitcoin’s historical patterns. Bitcoin has experienced numerous 10% corrections in past bull cycles, often preceding new all-time highs.
Raoul Pal, CEO of Global Macro Investor, compared the current pullback to 2017, when Bitcoin saw five separate 28% corrections before rallying to record highs.
Additionally, technical analysis suggests that Bitcoin's next major support lies between $70,000 and $75,000. LMAX Group strategist Joel Kruger stated, “For Bitcoin to regain bullish momentum, we need clearer regulatory frameworks and renewed institutional demand.”
Conclusion
The Bitcoin market is currently facing multiple headwinds, including declining global liquidity, ETF outflows, regulatory uncertainty, and security concerns. However, historical data suggests that Bitcoin has rebounded from similar corrections in the past. With the upcoming Bitcoin halving event and increasing institutional interest, Bitcoin’s long-term trajectory remains strong.
While short-term volatility persists, market participants should closely monitor liquidity trends, regulatory developments, and institutional buying behavior to assess Bitcoin’s next move.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Investing in cryptocurrency carries inherent risks, and individuals should conduct their own research before making any investment decisions.
