Bitcoin has Dropped to €75,000 – What’s Happening in the Cryptocurrency Market?

The price of Bitcoin dropped to $78,200 (€75,200) on Friday morning, marking its lowest valuation since November 2024. Since the beginning of this week, Bitcoin has lost more than $17,000 in value and was last traded at a similar level just before the announcement of the U.S. presidential election results. Analysts point to growing concerns about a global economic recession and a potential trade war as the main driving forces behind the sell-off in the crypto market.

Trump’s Tariffs Create Uncertainty

The recent sell-off in the crypto market correlates with reports that U.S. President Donald Trump plans to maintain tariffs on imports from Canada and Mexico. However, that was just the beginning. This week, Trump announced that the U.S. will soon impose a 25% tariff on imports from the European Union (EU). Analysts and investors see this as a potential trade war between the world’s largest trading partners, bringing significant uncertainty to financial markets.

These actions have led investors to shift capital into long-term U.S. Treasury bonds, which are considered the least risky assets in such situations. Even gold, traditionally seen as a safe store of value during uncertain times, has declined from its historic high of $2,956 to $2,860 over the past two days, reflecting broader market concerns. The negative sentiment has also hit stock markets, with the S&P 500 down more than 4% in the last five days and the Nasdaq dropping by 7.3%.

During his campaign, Trump promised pro-crypto policies, pledging to be the “crypto president.” He committed to creating a national Bitcoin reserve, reforming crypto regulations, and appointing crypto advocates Howard Lutnick and David Sacks to key positions in his administration. However, his recent tariff decisions are not benefiting the crypto market.

Investor sentiment in the crypto market was further shaken by last week’s report that Bybit, one of the leading crypto exchanges, was hacked—likely by North Korean hackers—who managed to steal $1.5 billion in assets. This marks the largest hack in crypto history. Despite the incident, Bybit remained stable and appears to have successfully bought back the stolen assets, operating as usual.

Will Bitcoin Fill the CME Gap?

Bitcoin’s current price level is attracting significant attention from analysts. One of the key levels being monitored is the CME Gap—a price discrepancy that usually occurs between the Friday closing price of Bitcoin futures on the Chicago Mercantile Exchange (CME) and its opening price after the weekend. While the crypto market operates 24/7, CME Bitcoin futures follow specific trading hours and remain closed on weekends.

Following Donald Trump’s election victory on November 4, 2024, such a price gap emerged. CME Bitcoin closed at $77,930 on Friday, November 8, 2024, but Bitcoin’s price surged over the weekend. As a result, CME Bitcoin opened its next trading session at $81,210, creating an unfilled gap in futures orders.

Source: TradingView

Historically, it has often been the case that these price gaps are eventually filled, sooner or later. This process is often considered a natural market behavior, reflecting a return to equilibrium. This could also be one of the reasons behind the current decline – the market simply returned to fill the gap that occurred in November before moving upwards again.

Red February for Spot ETFs

The current price development of Bitcoin is correlating with the behavior of investors who are investing in Bitcoin through spot BTC ETFs. Since the beginning of February, Bitcoin has seen only 4 days of inflows into spot BTC ETFs. On the other hand, February has turned out to be the worst month in terms of the performance of Bitcoin ETFs – so far, Bitcoin has experienced 13 days of capital outflows this month.

In total, the inflows into BTC ETFs in February amounted to $644 million, while outflows exceeded $4.2 billion. This resulted in a negative net flow, with a net outflow of over $3.6 billion. As a result, the total net assets of Bitcoin ETFs have fallen below the $100 billion mark.

Source: Farside

Fear and Greed Index at 2022 Levels

The cryptocurrency Fear & Greed Index reached 10 points out of 100 on Thursday, signaling a zone of extreme fear in the crypto market. The last time such a level was recorded was in June 2022, when Bitcoin was trading around $20,000. Many investors use the Fear & Greed Index as an indicator for their trading decisions – when the market is in fear, it signals a buying opportunity, while the greed zone indicates a potential market overheating. In November 2024, the index was at 94 points out of 100, but sentiment has completely reversed over the past three months.

Source: Fear & Greed Index

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