Bitcoin's Price Plunge: Macro Uncertainty Drives Crypto Market Downturn

Bitcoin's recent price movements have reflected a period of consolidation, with the cryptocurrency dropping below $90,000 after failing to break above its all-time high in February. According to the latest edition of the "Bitfinex Alpha" report, macroeconomic uncertainty is exacerbating this scenario.

Over the past week, Bitcoin fluctuated within a 6.5% range, peaking at $99,574 on Feb. 21 before closing at $96,346. Since then, it has dropped a further 7.5% to $88,600 as of press time. Two significant events exacerbated the market downturn: a hack involving crypto exchange Bybit and a sharp decline following the expiration of S&P 500 options. The latter resulted in a 4.7% drop that temporarily pushed Bitcoin below $95,000 before recovering.

As of Feb. 22, Bitcoin had declined 5.9% from its recent peak and now sits down 19% despite a 48.4% surge in November 2024. Ethereum (ETH) and Solana (SOL), which also saw substantial gains in late 2024, have retreated 16.9% and 33.1%, respectively. Memecoins, known for their extreme volatility, declined 37.4% after recording a 90.2% rally in December 2024. They have since fallen an average of 12% across the board over the past 12 hours.

The contraction is not isolated to digital assets. The broader financial market has also struggled, particularly the S&P 500, which had difficulty sustaining a rally above the 6,000 level and now sits at 5950 in pre-market. A 2.1% drop in equities on Feb. 21 mirrored the downward pressure across risk assets, including crypto. Feb. 24 saw it fall even further. The correlation between crypto and traditional markets remains a defining factor, with investors responding to broader macroeconomic signals.

Bitcoin exchange-traded funds (ETFs) have seen a marked slowdown in inflows, indicating reduced institutional interest. US-based Bitcoin ETF purchases have dropped from daily acquisitions of 4,000–5,00