Author: Techub Exclusive Interpretation

Writer: Glendon, Techub News

Since Bitcoin fell below $90,000 on February 25, the Altcoin market has experienced a comprehensive crash, with the market performance sliding like a slide. In the early hours of today, Bitcoin once fell to around $82,200, hitting a new low since November 12, 2024; Ethereum also fell to around $2,100, wiping out all its gains since August 2024.

According to Coinglass data, as of the time of writing, the total liquidation amount in the past 24 hours exceeded $772 million, of which Bitcoin and Ethereum accounted for 60% and 17% respectively, and a large number of Altcoin long positions were also collectively liquidated in the past two days.

As the market sentiment remains in a "state of extreme panic", although Bitcoin and Ethereum have fallen so much, there is still no sign of the downward trend stopping. So the question is, what is the cause of this round of Altcoin market crash?

Based on multiple factors and analysis, the author believes that this market crash may be a "panic stampede" phenomenon under the resonance of multiple negative factors.

Macroeconomic Policy Factors

At the macro level, it can be combined with the uncertainty of Trump's recent policies, the US stock bubble, and the failure of the Fed's interest rate cut expectations.

First, although Trump had publicly stated that he supports Bitcoin as a "strategic reserve asset", he did not actively promote the formulation of relevant Altcoin policies after taking office. In fact, the market sentiment had already been pushed to its peak by investors' various optimistic expectations even before Trump took office. With Trump's continued tariff plan (such as imposing import tariffs on Mexico and Canada), some analysts pointed out that this has triggered public concerns about the trade war, causing investors to choose to sell off high-risk assets such as Bitcoin.

In addition, the review process of state-level Bitcoin-related bills in the US has also begun to be obstructed. Currently, more than 30 states in the US have proposed bills involving strategic Bitcoin reserves and digital asset investments, but some state governments have rejected the relevant proposals, with the most significant impact being the South Dakota legislature's seemingly delayed but actually killed "bill allowing state governments to invest in Bitcoin". During the same period, the strategic Bitcoin reserve bills proposed by Montana and Wyoming were also rejected.

The occurrence of this series of events has also exposed the differences between the Trump administration and state-level policies. Investors suddenly found that the passage of Bitcoin bills was not as smooth as they had imagined, and when their expectations were repeatedly disappointed, it undoubtedly weakened the market's confidence in the Trump administration's "Crypto-friendly" commitment to a certain extent.

On the other hand, the US stock bubble and the Fed's interest rate cut being far away have also had an impact on the Altcoin market.

According to Yicai Global, as of February 26, the US stock market has experienced four consecutive days of sell-offs, with popular tech stocks plummeting from their highs, with cumulative declines ranging from 10% to 35%. Some analysts pointed out that this sentiment of selling off high-valuation tech stocks is also gradually spreading to the Altcoin field, with investors worried that the US stock bubble will burst and risk appetite will plummet rapidly, causing funds to withdraw from high-volatility assets such as Bitcoin and Ethereum. At the same time, the Fed has not shown any intention to cut interest rates, and in the high-interest-rate environment, the US dollar as a global reserve currency has become more attractive, causing some funds to flow back from Altcoins and other risky assets to US dollar assets.

The Altcoin Market is Plagued by "Negative Buffs"

The Altcoin market has recently been plagued by both internal and external troubles, with "negative buffs" piling up all over it.

Since February this year, Bitcoin spot ETFs have experienced a serious "bleeding effect". As an important inflow channel for institutional funds, its fund flow data is also one of the key indicators affecting market confidence. However, throughout February, Bitcoin spot ETFs have been experiencing net outflows, with some outflows exceeding $100 million.

According to iChaingo data, from February 18 to 26 Eastern Time, the US Bitcoin spot ETFs experienced 7 consecutive days of net outflows, with a net outflow of as high as $1.14 billion on February 25, setting a new record for the largest single-day net outflow since its launch, which undoubtedly reflects the pessimistic expectations of institutional investors on the short-term price trend.

In comparison, the situation of Ethereum spot ETFs is better than Bitcoin, but it has also experienced 5 consecutive days of net outflows from February 20 to 26. However, the negative factors facing Ethereum are not limited to this.

In fact, Ethereum has already fallen into the dilemma of expansion and is unable to extricate itself, which is also the main reason for its relatively sluggish price performance in the past two months. Ethereum plans to alleviate the expansion problem through the Pectra upgrade, but the process of this upgrade going live has not been smooth sailing. According to CoinDesk, the Ethereum Pectra upgrade was activated on the Holesky testnet but was ultimately unable to be confirmed, and as of now, the Ethereum official has not announced the reason why the testnet was unable to complete.

In addition, Solana, which once dominated the MEME coin market, has also suffered multiple blows recently. Under the successive attacks of Trump's MEME coin TRUMP and the MEME coin LIBRA promoted by the President of Argentina, the potential value of the MEME coin market has been severely shrinking, and many investors have lost interest in MEME coins, with some analysts even believing that the MEME coin craze is nearing its end. As a result, the MEME coin market that Solana relies on has also entered a state of decline.

Even more heartbreaking is that Solana is about to face the largest-scale SOL token unlocking "storm". According to Cointelegraph, Solana will unlock over 11.2 million SOL tokens (worth about $2 billion) on March 1, which undoubtedly adds "insult to injury" to SOL's performance. Crypto analyst Artchick.eth analyzed that "over 15 million SOL (about $2.5 billion) are expected to enter the circulating market in the next three months." Affected by this, SOL once fell to around $130, hitting a new low since September 18, 2024.

Frequent Hacker Attacks

On the night of February 21, the Altcoin trading platform Bybit was hacked, with over 400,000 Ethereum and stETH (total asset value exceeding $1.5 billion) stolen, making it the largest theft case in the history of the Altcoin industry, and also causing the Altcoin security issue to be questioned again, triggering a large number of panic sell-offs by investors. Although Bybit has made efforts to minimize the negative impact, the huge amount of Ethereum stolen by the hackers is undoubtedly a "landmine" affecting the market sentiment.

As of the time of writing, according to monitoring by X user Yujin, in the past 24 hours, the addresses marked as Bybit hackers have laundered about 71,000 Ethereum (worth about $170 million). So far, the Ethereum that has been washed away has reached about 206,000, but the hacker addresses still hold 292,000 Ethereum (worth about $685 million). Previously, Yujin had stated that the hackers are expected to convert the remaining ETH into other assets (such as BTC, DAI, etc.) within half a month.

Except for Bybit, the stablecoin payment platform Infini was also attacked by hackers on February 24, with nearly $50 million in crypto assets stolen. Although the amount stolen was far less than the former, the successive occurrence of hacker incidents not only undermined investor confidence, but also had a direct impact on market sentiment.

In summary, this round of decline is not only the market's own demand adjustment, but also the market's comprehensive response to the withdrawal of institutional funds, the impact of macroeconomic policies, hacker incidents, and the bursting of the bubble. The author believes that from a fundamental perspective, the sustained rise of cryptocurrencies such as Bitcoin since the end of 2024 has accumulated a considerable amount of profit-taking, but since early February, the Bitcoin price has been fluctuating in the range of $90,000 to $100,000 and has not been able to break through the resistance level, coupled with the lack of major positive factors, these profit-taking sales will exert tremendous pressure on the market price, even in the absence of major negative factors.

However, although the current market has suffered multiple blows, it is still too early to declare the "end of the bull market".

Yu Jia-ning, co-chairman of the Blockchain Special Committee of the China Communications Industry Association, said in an interview with the Beijing Business Daily that "the current decline is likely to be a technical adjustment rather than a long-term trend reversal". The author believes that in the short term, we need to be vigilant about the risk of further downside triggered by the selling crisis, but in the medium and long term, the market clearing may lay the foundation for a new cycle. In addition, if the Trump administration proposes crypto-related policies and the strategic Bitcoin bills are passed in various states in the United States, it will undoubtedly bring unpredictable development to the entire crypto market.