The Bitcoin price dipped below $80k today and was trading at $77k for a moment, the lowest level since summer last year. Total crypto market cap is down 3.5% today, now below $2.6 trillion.
Altcoins are bleeding heavily. Most of them are trading 50-80% below their respective bull run highs. Trade wars, unstable economic situations globally, and the stock market crash are just too much for crypto right now.
The Kobeissi platform, which offers excellent insights on global financial markets, weighed in on the situation.
What you'll learn 👉
The Real Reason Behind the Market Crash
According to Kobeissi, markets have experienced one of the most sudden shifts in sentiment since 2020, with the S&P 500 and crypto erasing a combined $5.5 trillion of market cap over the last two months.
Though markets have known about the trade war since mid-2024, the S&P 500 continued to hit all-time highs even after tariff threats increased in December and the trade war officially began on February 1st. But since February 20th, the S&P 500 has lost approximately $4.5 trillion in market cap, averaging around $350 billion per day over 13 consecutive days.
Kobeissi suggests that the trade war is merely a scapegoat. The actual cause of the market’s decline is a dramatic shift in risk appetite, moving from extreme greed to extreme fear within days. This polarized positioning has caused markets to swing completely in the opposite direction.
Interestingly, institutional investors began exiting before this decline in tech stocks. Heading into 2025, hedge fund exposure to Magnificent 7 stocks fell to a 22-month low. On February 9th, institutional investors created the largest Ethereum short position in history while retail investors were still buying crypto on hopes of a US Strategic Reserve.
Sentiment Shift Driving Market Movements
The Fear & Greed indices in both crypto and stocks have hit their lowest levels since the 2022 bear market. Last year, crypto saw Extreme Greed levels above 92, but now sits at a polar opposite of 17. Kobeissi emphasizes that sentiment is the ultimate driver of price in any market, regardless of fundamentals.
This rapid sentiment shift has triggered record outflows and “flash crashes.” Crypto funds recorded a $2.6 billion outflow in the last week of February alone, approximately $500 million above the previous record set in 2024. Meanwhile, US small-cap funds saw $3.5 billion in outflows, mid-cap funds lost $2.1 billion, and sectoral funds experienced $4.5 billion in outflows, including $1.9 billion from technology funds.
Kobeissi points out that crypto’s decline is even more telling of the sentiment shift. Despite several bullish developments in the crypto space over the last two months, including progress on the US Bitcoin Reserve, these positive catalysts became “sell the news” events. Even as many of Trump’s pro-crypto promises came to fruition, the digital asset market still shed over $1 trillion in value.
What’s particularly noteworthy is the disconnect between fundamentals and price action. In December 2024, Apollo published their risks for 2025 with a 0% chance of a US recession, while assigning a 90% probability to tariffs. Markets have known about potential tariffs for months, suggesting the current decline isn’t entirely due to trade tensions but rather a fundamental change in how investors perceive risk.
Read also: Expert Who Predicted Bitcoin (BTC) Last Bull Run Calls Rally to $120K—When to Buy the Dip
Is the Crypto Bull Run Over?
The crypto bull run seems to be cooling off. The big drop in Bitcoin’s price and the heavy losses in altcoins show that market mood has changed dramatically.
Bitcoin might find support around $70k, where many big investors got in. If that doesn’t hold, we could see prices fall to $60k. But if the global markets calm down, Bitcoin might bounce back and test $90k again. Crypto markets always move in cycles. Even if this bull run is ending, another one will likely come in the future. Right now, it’s smart to manage your risk and prepare for more price swings as the market adjusts.
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