Market flash crash on Tuesday—was it due to tariff expectations?
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Market flash crash on Tuesday—was it due to tariff expectations?
The crypto market is bleeding heavily.
Navigating Web3 tides with focused insightsAuthor: Pzai, Foresight News
On February 25, the cryptocurrency fear and greed index dropped to 25, hitting its lowest level since September 2024, shifting the market from neutral yesterday to extreme fear. Against the backdrop of Trump aggressively wielding tariff threats and instability in European political fundamentals, U.S. stocks closed lower on Monday, with the S&P 500 down 0.49% and the Nasdaq falling 1.2%.
A wave of tokens also severely damaged market expectations with a "high-dive" collapse. Bitcoin briefly fell near $90,000, while SOL plunged to the $140 level within a single day.
Looking at relevant crypto-related U.S. stocks, MSTR dropped to around $282 due to Bitcoin's price volatility, retreating to mid-November 2024 levels, while Coinbase fell to $230, reaching its lowest point since November 2024. What exactly happened in today’s crypto market? This article analyzes the situation from market sentiment and on-chain data.
Market Analysis
On February 24, Bitfinex reported that due to persistently stagnant market momentum, Bitcoin had remained range-bound between $91,000 and $102,000 over the past week. On February 21, after news emerged of heavy selling following the expiration of S&P 500 options, volatility spiked, causing Bitcoin to drop 4.7% that day.
Additionally, recent geopolitical factors have raised red flags for market sentiment—for example, Trump stated at a press conference that punitive tariffs on Canada and Mexico would proceed “on time, as planned.”
Recent hacking incidents have also triggered some sell-off expectations. The theft of $1.5 billion worth of ETH assets from Bybit significantly dented Ethereum’s asset price, pushing it below the $2,500 threshold.
Regarding major assets, under the dual pressure of fading MEME enthusiasm and large-scale token unlocks, SOL declined by 13.07%. According to DefiLlama data, Solana’s TVL peaked at $12.19 billion on January 19 but has since continuously declined to $7.346 billion, dropping nearly 40%.
Overall, as MEME liquidity withdraws and flows elsewhere, Solana-based tokens have also fallen, with average declines exceeding 10%. Recently, whether it’s Argentine President Milei’s LIBRA coin or Kanye West’s token controversy, both have significantly shaken market confidence, leading investors to shift focus back to other projects. Nic Puckrin, founder of The Coin Bureau, said people in the current crypto market are already growing tired of meme coins, with new ones launching almost daily, often promoted and dumped by celebrities. Investor sentiment now may be as low as during the FTX collapse—or even lower.
Sentiment Spread
Arthur Hayes, co-founder of BitMEX, analyzed from an ETF perspective, stating that many IBIT holders have been profiting above short-term Treasury yields by going long on ETFs and shorting CME futures. If falling BTC prices narrow the basis spread, these funds will sell IBIT and cover their CME futures positions. He also expressed a bearish outlook targeting $70,000 USDT. Jeff Dorman, Chief Investment Officer at digital asset management firm Arca, said: "The weakness in the cryptocurrency market is largely due to低迷 market sentiment, losses from failed meme coin launches, and lack of funding support for new tokens." According to Coinglass data, affected by this market movement, liquidations reached $911 million within 24 hours, the highest in nearly three weeks.
However, behind the panic, many companies continue accumulating. On February 24, Strategy (formerly MicroStrategy) purchased 20,356 additional bitcoins at an average price of $97,514, bringing its total holdings to 499,096 BTC. Metaplanet also announced on February 25 the purchase of another 135 BTC at an average price of $95,826, totaling approximately $12.936 million. Overall, these companies still maintain strong confidence in Bitcoin’s status as a mainstream crypto asset.
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