Bitcoin and Ethereum see historic February losses as liquidity concerns grow

Bitcoin experienced its biggest February decline in more than a decade after closing last month with an over 17% drop in value. The flagship asset, which started February at over $101,000, fell as low as $78,000 before ending the month at over $84,000.

According to Coinglass data, this is the second-largest drop that BTC has experienced in February, which historically has been a positive month for the flagship asset. Its biggest decline for that month came in 2014 when it fell 31%.

However, Bitcoin has only experienced a drop in value thrice in February since 2013, when Coinglass started keeping the data with the last one before this coming in 2020. On average, the flagship asset experienced a 13% rise in February.

Meanwhile, Bitcoin’s decline in February was even better than Ethereum’s. ETH, which has been struggling since 2024, nosedived last month with a massive 32% decline in value. Although it was trading around $3,300 at the beginning of the month, it lost more than $1,000 in value, falling as low as $2,100 on February 28.

The massive decline is also a historical anomaly for Ethereum, which last experienced a February loss in  2018 when it dropped 24%. Overall, it has averaged an 11.68% gain during the month.

Bitcoin’s performance in February is the worst monthly decline the asset has experienced since June 2022.

The forces pulling the crypto market down

Meanwhile, several factors contributed to the massive decline that Bitcoin and other digital assets experienced last month. The biggest factor was President Donald Trump‘s announcement that the 25% tariffs on Canada and Mexico would finally go into effect by March 4, along with the extra 10% tariffs on Chinese imports.

With the initial announcement of the tariffs inducing the sell-off of crypto, the news of its renewal, coupled with other signs of geopolitical tensions and uncertainties, was enough to drive crypto to its lowest level in more than 3 months. This highlights how political events have significantly influenced digital assets’ performance.

Other factors, such as the $1.5 billion hack of ByBit, which the exchange recovered from, and other macroeconomic issues, also contributed to the sizable losses for crypto holders in February.

Despite the decline, Bitcoin and several other crypto continue to trade at a better level than before Trump was elected president, showing that they retained some of their gains even. For instance, Bitcoin, which is trading above $84,000, was worth $69,000 as of November 6, 2024.

Market in rebound, but will it last?

Following that massive decline to close out February, the crypto market is now experiencing a price rebound led by Bitcoin, which has gained 5% in the last 24 hours. Solana is also up 4.67%, and XRP has gained 5.57%, while ETH saw just a 2.27% gain.

Still, it is too early to determine whether the dip is finally over. Data from Santiment shows crowd sentiments, which are mostly bearish across several social media platforms. This is a good sign of an incoming rebound, as BTC is historically contrarian to the crowd.

However, the liquidity drain has contributed to weakened demand for BTC this year and is one of the major reasons the crypto market has struggled to gain momentum. CryptoQuant data shows that Binance stablecoin reserves have been declining, particularly for USDT and USDC, and if this continues, the market might see more liquidity crunch.

Meanwhile, exchange-traded funds (ETFs) have not been the major source of demand for BTC this year compared to 2024. As of this time in 2024, Bitcoin ETFs have accumulated over 128,000 BTC, valued at $6.3 billion, while the 2025 numbers show around 12,000 BTC, valued at $1.7 billion. This is a sizable decline in both BTC and dollar terms.

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