By Rania Gule, Senior Market Analyst at XS.com – MENA
Bitcoin (BTC) faced strong selling pressure after U.S. President Donald Trump announced the imposition of tariffs on Mexico and Canada starting in March. This led to an 8% market decline, pushing Bitcoin below the $92,000 level. In my view, this decline stems from investor concerns about the impact of tariffs on global trade. The uncertainty prompted many to reduce their risks, leading to liquidations exceeding $1 billion in the futures market. Additionally, Bitcoin exchange-traded funds (ETFs) saw outflows of $571 million last week, reflecting declining investor confidence, particularly amid growing regulatory and macroeconomic pressures.
Alternative cryptocurrencies, such as Solana (SOL), also suffered significant losses after the North Korean Lazarus Group was linked to Pumpfun meme coins. This caused SOL to drop 15% below $150. The decline in investment activity has reduced the number of active wallets, indicating a decrease in risk appetite. Despite this downward trend, I believe Bitcoin still maintains its long-term bullish structure. Sustained downward pressure could lead to an extended sideways consolidation phase, similar to what happened in March 2024, potentially setting the stage for a market rebalance before resuming the upward trend.
Multiple indicators suggest that cryptocurrencies, particularly Bitcoin, are facing significant challenges that may impact their near-term stability. These challenges include declining institutional demand, sharp price drops due to security breaches, and regulatory concerns—all factors complicating the short-term outlook for digital assets.
One major recent event was the massive security breach at Bybit, where $1.4 billion was stolen last week. This triggered widespread panic in the market, leading to large-scale liquidations. In my opinion, this incident highlights the ongoing vulnerabilities in the cryptocurrency infrastructure and serves as another wake-up call regarding increasing security risks. Such breaches raise concerns about fund safety on centralized exchanges, which could drive greater demand for decentralized exchanges. However, security challenges and technical risks remain significant obstacles to a swift market recovery after such incidents.
Despite the decline in institutional demand and security breaches affecting some platforms, Bitcoin remains a focal point for individual investors and companies looking to acquire digital assets as part of their reserve strategies. “Strategy,” formerly known as “MicroStrategy,” continues to buy large amounts of Bitcoin, recently adding nearly $2 billion worth to its holdings in a massive purchase. This investment strategy reflects the company’s long-term commitment to Bitcoin as a hedge against inflation and economic crises. However, the sustainability of this approach remains uncertain given the market’s instability and volatility.
In my view, “Strategy’s” move represents a divergence in institutional strategies. While individual investors and institutional players like “MicroStrategy” are increasing their Bitcoin holdings, ETF flow data suggests the opposite trend, with declining inflows. This highlights a clear contrast between retail investors adopting Bitcoin as a hedge and institutions reassessing its long-term advantages as a volatile asset.
As for short-term price expectations, I believe the market remains highly volatile, with increasing concerns that sharp price drops could continue if institutional demand remains weak. Bitcoin may experience significant fluctuations between the $85,000 and $100,000 levels in the coming period, depending on the influence of the previously mentioned factors. However, some positive factors could support Bitcoin’s stability, such as growing corporate adoption—exemplified by companies like “MicroStrategy”—and increasing interest in specific markets.
Ultimately, Bitcoin and the broader cryptocurrency market face an uncertain future, shaped by multiple factors, including regulatory shifts, investor sentiment, and the stability of the industry’s infrastructure. While Bitcoin may continue to be considered a valuable asset in the long run, challenges such as security breaches and weak institutional demand exert downward pressure on the market. If these conditions persist, further corrections could push Bitcoin’s price to lower levels than its current valuation.
