Jinse Finance xiaozou compiled from CoinDesk & The Kobeissi Letter On February 25, 2025, Bitcoin fell below $87,000, reaching its lowest level since mid-November last year. What happened in the crypto market? Jinse Finance xiaozou summarized the reasons for the decline, which may be as follows: 1. Several U.S. states have a reserved attitude towards Bitcoin reserve proposals Prior to this decline, several U.S. states had a reserved attitude towards Bitcoin reserve proposals. BRN analyst Valentin Fournier said, "Although U.S. President Trump recently expressed support for Bitcoin, Bitcoin reserve proposals in Montana, North Dakota, and Wyoming have not been passed. Policymakers are reluctant to be accused of speculating with taxpayers' money, highlighting political risks." Fournier added, "In the future, a nationwide reserve strategy supported by bond issuance or partial sale of U.S. gold reserves may be a more feasible path." 2. Global money supply has declined Some observers believe that the weakness of Bitcoin is consistent with the downward trend in global money supply at the beginning of this year. Andre Dragosch, Head of European Research at Biwise, pointed out on the X platform that "there seems to be a lag between global money supply and Bitcoin prices." 3. Crypto and U.S. stocks fell in sync, liquidity dried up The Kobeissi Letter financial newsletter commented on the concerns about the drying up of crypto liquidity on the X platform: Since last Friday morning, the market capitalization of the cryptocurrency market has shrunk by $325 billion. Today at 5 p.m. Eastern Time, the cryptocurrency market lost $100 billion in an hour, with no major news during that time. What happened in the cryptocurrency market? In the past 24 hours alone, we have seen about $150 billion evaporate from the cryptocurrency market. The sell-off has expanded, with almost all crypto assets experiencing significant declines. Even the meme coin market seems to have lost a considerable amount of liquidity. So, what happened? It seems to have started with Solana, which has fallen 22% since last Friday. Solana had shown exceptional relative strength during the meme coin frenzy. However, as the meme coin frenzy subsided, Solana also began to weaken. For a period, Solana's sell-off was largely unrelated to Bitcoin. However, as the S&P 500 index began to decline last Friday, Bitcoin also joined the downward trend. As shown in the image below, the decline in the S&P 500 index was accompanied by an acceleration in Bitcoin sell-offs. Now, with Bitcoin breaking below the $98,000 support level, it is losing its relative strength. 4. Citadel Securities enters the crypto market Interestingly, this situation occurred just a few hours after Citadel made a significant shift in its stance on cryptocurrencies. Today, Bloomberg announced that the $65 billion Citadel Securities is seeking to become a liquidity provider for Bitcoin and cryptocurrencies. The market views this as a "sell the news" event. 5. Bybit hacking incident dampens market sentiment Furthermore, the Bybit hacking incident on February 21 also seems to have dampened market sentiment. Arkham Intelligence called this attack the "largest financial heist in history" since the $1 billion theft from the Central Bank of Iraq in March 2003. In fact, the scale of the funds stolen in the Bybit hacking incident is more than double the size of the previous largest cryptocurrency hacking incident, which was the $611 million theft from PolyNetwork in August 2021. The weakness of Ethereum has also put greater pressure on the entire cryptocurrency market. The hacking attack has undermined market confidence. The technical aspect also seems to have lost momentum. However, this does not mean that the cryptocurrency market will enter a long-term bear market. In this bull market, we have witnessed numerous 10% corrections in Bitcoin. Technical corrections are a healthy and positive sign. 6. SBF returns to the X platform Most importantly, Sam Bankman-Fried has returned to the X platform. Amid the cryptocurrency crash, SBF has returned and expressed "sympathy for government employees". At the same time, DOGE and Elon Musk are preparing for more large-scale layoffs in the federal government. Finally, with volatility returning to the stock market, risk assets like Bitcoin are undergoing a correction. We saw historical levels of risk appetite in 2024 and it continued into 2025. The correction in risk appetite means a reduction in liquidity in the cryptocurrency market. This has certainly happened before. We all know that the cryptocurrency market needs liquidity to thrive. Overall, there is no single specific factor driving the decline in cryptocurrencies. Instead, it is a combination of multiple factors that have led to the decrease in liquidity. In the end, we conclude with a quote from Andre Dragosch: "The recent money supply has bottomed out, which means that the price decline of Bitcoin is unlikely to last too long."