Bitcoin Drops to Around $80,000 as Crypto Market Declines Sharply

Overview

Bitcoin (BTC) experienced a sharp decline, briefly dropping to around $80,000 amid concerns over U.S. trade policies and a major exchange hack, leading to widespread losses in the cryptocurrency market. BTC fell nearly 7% in just a few days, marking its lowest level since November 2024. This drop represents one of the steepest weekly declines since the FTX collapse in November 2022. Major altcoins also saw significant declines, with Ripple (XRP) breaking key support levels and Solana (SOL) hitting multi-month lows as market-wide sell-offs accelerated.

Market Data

Over the past 24 hours, Bitcoin’s price has dropped from approximately $85,000 to $78,000, representing a 7% decline. Ethereum (ETH) also fell around 6%, dipping to $2,100, its lowest level in a year. The total cryptocurrency market capitalization shrank by around 7%, wiping out hundreds of billions of dollars from the market.

The sell-off triggered a wave of liquidations in the futures market, with over $870 million worth of positions being forcibly closed. Among them, Bitcoin accounted for approximately $414.8 million, while Ethereum liquidations totaled $205.6 million. In total, 216,000 traders were liquidated, with the largest single liquidation occurring on HTX (formerly Huobi), where a BTC/USDT position worth $38 million was closed. Other major altcoins such as Solana (SOL), XRP, and Dogecoin (DOGE) also saw tens of millions of dollars in liquidations.

Reasons Behind the Drop

Several factors contributed to the steep decline:

1. Macroeconomic Concerns in the U.S.

A major catalyst for the market downturn was growing concerns over U.S. economic policies. President Donald Trump’s announcement of new tariffs heightened fears of economic slowdown and inflation, prompting a shift toward safe-haven assets like the U.S. dollar. The U.S. Dollar Index (DXY) spiked to 107, reflecting investors’ risk-averse sentiment.

2. Regulatory Uncertainty in the Crypto Sector

Despite Trump’s pro-crypto stance, regulatory clarity remains lacking. While key figures in the administration favor crypto adoption, concrete regulatory frameworks are still pending, leading to uncertainty among institutional investors.

3. Major Exchange Hack Raises Security Concerns

A significant contributor to the sell-off was a security breach at Bybit, where hackers reportedly stole $1.5 billion worth of crypto assets. The attack exacerbated market volatility, leading to a loss of investor confidence and increased selling pressure.

4. Institutional Selling and ETF Outflows

The Bitcoin spot ETF market has seen sustained capital outflows, with over $1.1 billion withdrawn in the past two weeks. This suggests that institutional investors may be taking profits, contributing to additional downward pressure on prices.

Investor Reactions

Market participants have reacted cautiously, shifting toward a risk-off strategy. Many traders are liquidating positions, further fueling downward momentum. The Crypto Fear & Greed Index has dropped significantly, reflecting growing uncertainty among investors.

Kyle Rodda, a senior market analyst at Capital.com, stated, “The market is losing momentum due to a lack of fresh bullish catalysts.” Similarly, strategists at crypto investment platform Nexo highlighted that Bitcoin remains highly sensitive to global macroeconomic trends, with the Federal Reserve’s interest rate policies playing a crucial role in future price movements.

Traditional financial markets have also reacted negatively to the crypto decline. Shares of crypto-related stocks, including MicroStrategy (MSTR) and Coinbase (COIN), fell by 4-5%, reflecting broader concerns over the digital asset market’s stability.

Future Outlook

Bitcoin’s short-term outlook remains uncertain, with key support levels around $75,000–$78,000 now being closely monitored. If BTC manages to hold above this range, a potential rebound could be expected. However, if Bitcoin breaks below the $75,000 support, the next key levels to watch would be $57,691 (Fibonacci retracement) and the 200-week moving average at around $48,000.

The broader market remains highly dependent on macroeconomic indicators, particularly inflation data and Federal Reserve policy decisions. If inflation slows and the Fed signals a more accommodative stance, it could provide a boost for risk assets, including cryptocurrencies. However, continued economic uncertainty could lead to further declines.

Additionally, the regulatory landscape will play a critical role in shaping investor sentiment. Trump’s recent Bitcoin Strategic Reserve Plan and the SEC’s softened stance on crypto regulation are long-term bullish catalysts. However, investors remain cautious, awaiting concrete policy actions.

Key Takeaways:

• Bitcoin dropped nearly 7% to around $78,000, marking its lowest level since November 2024.
• Over $870 million in liquidations occurred, with Bitcoin and Ethereum leading losses.
• Macroeconomic concerns, regulatory uncertainty, and a major exchange hack at Bybit contributed to the downturn.
• Institutional outflows from Bitcoin ETFs have accelerated, signaling potential profit-taking by large investors.
• Key support levels to watch: $75,000–$78,000; further breakdown could lead to $57,691 or even $48,000.
• Market sentiment remains cautious, with investors awaiting further regulatory clarity and macroeconomic stability.

Investors should continue monitoring macro trends, regulatory developments, and institutional flows as Bitcoin navigates this highly volatile environment.