TLDR
- Crypto market lost $40 billion in 24 hours, with total market cap dropping by 2%
- Bitcoin and Ethereum ETFs saw significant outflows: $1.14 billion from BTC ETFs and $85.3 million from ETH ETFs in two weeks
- Major hacks including $1.4 billion from Bybit and $49.5 million from Infini have damaged investor confidence
- February, usually a strong month for Bitcoin, may end in the red as BTC is down 6.41% for the month
- Despite market downturn, Strategy (formerly MicroStrategy) purchased 20,356 BTC for approximately $1.99 billion
The cryptocurrency market took a hit today, with its total market cap dropping by 2% and wiping out $40 billion in just 24 hours. Both Bitcoin and Ethereum are struggling to gain momentum as several factors weigh heavily on the market.
The drop comes amid mounting outflows from Bitcoin and Ethereum ETFs, which have seen investors pulling out billions in recent weeks. The Crypto Fear & Greed Index currently sits at 40, showing a neutral market sentiment that could quickly shift to fear if negative trends continue.
Over the past two weeks, U.S. spot Bitcoin ETFs have recorded net outflows of $1.14 billion – the largest since their launch. Last week alone, Bitcoin ETFs saw $571 million in withdrawals, with Fidelity leading the outflows, followed by Grayscale and Bitwise.
Ethereum ETFs have also felt the pressure, losing a total of $85.3 million over the past two weeks. Grayscale accounts for the largest share of these outflows, which has pushed Ethereum’s price lower.
Market analysts point to several factors driving these outflows, including concerns over trade tariffs, inflation, and possible changes in monetary policy. These economic worries have created an environment where investors are moving away from riskier assets like cryptocurrencies.
Hacks
A series of major hacks has damaged investor confidence. The Bybit hack resulted in a staggering $1.4 billion loss in Ethereum, causing panic selling across the market. While Bybit’s CEO Ben Zhou confirmed the recovery of $742 million, many investors remain worried about security.
In another blow to market confidence, neobank Infini suffered a $49.5 million hack involving USDC. These security breaches have created additional selling pressure as investors question the safety of their digital assets.
February has historically been a strong month for Bitcoin, with most years bringing positive returns except for 2014 and 2020. However, this year Bitcoin is already down 6.41% for the month. Analysts suggest that BTC would need to close above $102,500 to turn February into a green month.
Currently, Bitcoin is fluctuating between $93,000 and $100,000. If it fails to hold support at $93,000, it could drop further to $90,000. The cryptocurrency was trading below $96,000 in recent hours and appears close to breaking beneath $95,000 for the first time since last week’s market crash.
Ethereum is also facing challenges, trading around $2,706 after a 2.2% decline. While Ethereum has performed well in the first quarter of every fourth year – with strong gains in Q1 2017 and Q1 2021 – it is down 17% this year. Competition from blockchains like Solana and Cardano continues to present challenges for Ethereum.
Strategy Buys More Bitcoin
Despite the market downturn, some major players are using this opportunity to increase their holdings. Strategy (formerly MicroStrategy) announced a purchase of 20,356 BTC for approximately $1.99 billion, at an average price of $97,514 per bitcoin.
This latest acquisition was announced by co-founder and former CEO Michael Saylor, bringing the company’s total bitcoin holdings to 499,096 BTC. Strategy has acquired these bitcoins for a total of $33.1 billion, at an average price of $66,357 per bitcoin.
Given Bitcoin’s current value, Strategy’s holdings are now worth approximately $47.4 billion, putting the company in a $14 billion paper gain position. This purchase came shortly after the company raised $2 billion by offering convertible notes at 0% coupon and 35% premium.
Strategy’s shares have not been immune to market pressures, losing over 12% in the past five days. They are down by 16.5% since this time last month but remain up by 105% on a 6-month scale, trading just below $300.
For now, market participants are closely watching key support levels for Bitcoin and Ethereum, as well as monitoring ETF flows and any developments related to the recent security breaches.
