5 min readBitcoin is attempting to recover after falling to a low of 82.2k on Wednesday, dropping over 20% from its record high of 109.5k, putting BTC in bear market territory. Bitcoin fell 12% in just three days, marking the steepest selloff since the collapse of FTX in 2022.
A wide range of other tokens, including Ether XRP and Solana, were also down as the crypto markets capitalization lost around 5% yesterday, falling below the $3 trillion level.
The selloff in Bitcoin triggered a $773 million liquidation in cryptocurrency trading positions over the past 24 hours. This follows a $1.15 billion liquidation on Tuesday, February 25, of which almost $1 billion was in long positions.
Institutional investors are also offloading their BTC holdings. BTC ETFs also experienced record net outflow on February 25, of $1.01 billion, followed by $754.6 million in net outflows on Wednesday, the second-largest net outflow level on record. For Bitcoin to sustain any recovery higher, BTC ETF net inflows would need to resume. More net outflows could see the Bitcoin price fall further.
What’s spooking the market?
This week’s set-off comes amid the ongoing fallout from the largest crypto hack of all time, when $1.5 billion of Ethereum was hacked from the Bybit exchange. Meanwhile, President Trump’s reiteration of threats of 25% tariffs on Canada and Mexico and adding the European Union to the list has fueled risk-off sentiment.
The outlook for crypto could remain weak with tariffs on Mexico and Canada potentially starting on Monday.
Attention will turn to US core PCE data tomorrow, the Federal Reserve’s preferred gauge for inflation, which is expected to ease to 2.6%. However, with concerns of stagflation gaining traction and short-term inflation expectations remaining high across consumer surveys, risk assets, including Bitcoin and stocks, could continue to struggle.
Ethereum upgrade Pectra goes live on Testnet.
Etherum has steadied after falling 15% in the past 48 hours, taking out the 2500 psychological level and falling to a low of 2250.
The fall in ETH/USD came even as the Ethereum Pectra upgrade went live on the Holesky testnet this week but failed to finalise in the expected time. This hard fork combines 11 major upgrades or improvement proposals, including an improvement to the user experience of wallets, enabling some smart contract capabilities. Another proposal will allow validators to increase their stake to 2048 ETH from 32. This was the first of two testnets to simulate Pectra. The next is scheduled for March 5 on the Sepolia testnet. After this, developers will set a final date to activate the update on mainnet.
Avalanche launches Visa crypto card
Avalanche is rising 5%, recovering some of the 14% drop seen at the start of the week. The recovery comes as the Avalanche Foundation in partnership with Rain, announced the launch of the Alanche card. This physical and digital credit card allows users to make purchases based on the value of their crypto assets anywhere that Visa is accepted. Users will be able to spend Avalanche tokens at any in-person or online store that takes Visa. This move gives the digital asset a real-world use, aiding mainstream adoption. Regions such as Southeast Asia, Africa, and Latin America could be earlier adopters.
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