Bitcoin Plummets 25%! $80,000 Mark Breached, What's Behind the Liquidation of 720,000 Traders?

February 28, 2025 Sina Finance | Written by: Blockchain Observer

I. Market Flash: Bitcoin Breaks Below $80,000, Sell-Off Sweeps Crypto Market

This afternoon, Bitcoin (BTC) prices plummeted below $80,000, hitting a new low since last November. This marks a near 40% drop from the all-time high of $109,241 on January 20th, a decline of over $30,000. Ethereum (ETH), SOL, Dogecoin (DOGE), and other major cryptocurrencies followed suit, with widespread declines exceeding 6%.

As of press time, the total market capitalization of the cryptocurrency market has evaporated over $300 billion, with 720,000 traders liquidated, resulting in $1.87 billion in long position losses. Hong Kong-listed cryptocurrency concept stocks also took a hit, with Meitu and Linekong Interactive falling by over 8%.

II. Catalysts for the Plunge: Multiple Negative Factors "Besiege" Market Confidence

• Policy Expectations Disappointed: The South Dakota legislature's postponement of a bill allowing state funds to invest in Bitcoin has dampened market expectations for regulatory easing. While the Trump administration is seen as "crypto-friendly," the lack of concrete policy support has led traders to withdraw their bets.  
• Largest Theft in History Shocks: A hacker attack on global exchange Bybit, resulting in the theft of $1.46 billion in assets, has triggered a crisis of confidence in cryptocurrency security. Ethereum and other currencies have seen increased selling pressure and larger drops.  
• ETF Fund Exodus: In the past six days, Bitcoin spot ETFs have seen a net outflow of $2.1 billion, with a single-day redemption exceeding $1 billion (led by Fidelity's FBTC). Tightening market liquidity has accelerated the sell-off.  
• Macroeconomic Risk Aversion: Concerns over a trade war triggered by Trump's tariffs on Chinese goods, coupled with waning expectations of Fed rate cuts, have led investors to turn to traditional safe-haven assets like gold, leaving cryptocurrencies out in the cold.

III. Expert Analysis: End of Bull Run or Technical Correction?

• Increased Short-Term Risk: Wall Street analyst Katie Stockton warns that Bitcoin could further test the $73,800 support level, and a breach could signal a "bear trap."
• Regulation and Security in Focus: Bitgo's APAC head of custody suggests that the market urgently needs clear policies from the Trump administration, such as a "National Bitcoin Reserve Plan," to stabilize confidence.
• Cautious Fed Stance: Powell reiterated that Bitcoin is "too volatile," more akin to gold's speculative nature than a practical currency.

IV. Investor Response: Opportunity in Crisis?

Despite widespread market panic, some institutions are still deploying capital against the trend. Citadel is applying to become a cryptocurrency liquidity market maker, betting on long-term industry prosperity. Analysts recommend:  

• Diversified Allocation: Avoid heavy positions in a single currency, focus on counter-cyclical assets.
• Monitor Policy and Technology: Policy changes in the US election year and blockchain security upgrades could be catalysts for a rebound.
• Rational View of Volatility: The crypto market is cyclical, and historical data shows that sharp drops are often followed by recovery rallies.

V. Future Outlook: When Will the Market Recover?

Bitcoin has entered a "technical bear market," but most institutions believe that if the $70,000 support level holds, coupled with positive regulatory news, a rebound could occur in the second quarter. In the long term, blockchain technology innovation (such as high-efficiency trading systems) and institutional adoption remain key growth drivers.