Four Reasons Why Bitcoin and Crypto Prices Are Crashing

The crypto market is in freefall, delivering a gut punch to investors as prices cratered on Tuesday. Bitcoin, Ethereum, Solana, and a bunch of other digital currencies nosedived by as much as 15%, shadowing a global slump that’s gripped stock markets as well.

Crypto exchanges watched helplessly as $1.5 billion in liquidations wiped out leveraged traders caught off guard by the brutal shakeout. Solana stands out as the biggest casualty among the top ten cryptocurrencies, shedding nearly 50% of its value since January 19 and limping along at $138. Analysts are scrambling to pinpoint the forces behind this carnage, and the picture emerging is one of colliding economic pressures, policy shifts, and industry-specific disasters that have left the crypto space reeling.

Trump Tariffs Spark Economic Jitters

A major blow to the crypto market stems from President Donald Trump’s aggressive tariff agenda. On Monday, Trump doubled down on his pledge to slap 25% import taxes on goods from Canada and Mexico, two of America’s closest trading partners.

Economists are sounding the alarm, warning that these levies could stoke inflation by jacking up consumer prices. In retaliation, Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum have vowed to hit back with their own tariffs if Trump follows through. The looming threat of a trade war has rippled through financial markets, dragging crypto down as investors recoil from the uncertainty. With global trade tensions simmering, the fallout is proving toxic for risk assets like digital currencies.

Federal Reserve’s Stance Dashes Rate Cut Hopes

The Federal Reserve’s latest moves are pouring salt on the wound. Fed Chair Jerome Powell has been wrestling with inflation since the pandemic rocked the economy, and January’s Fed minutes reveal fresh anxiety over how Trump’s trade and immigration policies might sabotage price stability efforts.

The Consumer Price Index (CPI) spiked to a nine-month high in February, snuffing out any lingering optimism for near-term rate cuts—a lifeline that crypto markets often rely on. With disinflation faltering, the Fed’s Board of Governors opted unanimously to keep interest rates unchanged, a decision that’s left risk-hungry investors with little to cheer about. For a crypto market already on edge, this hawkish pivot has amplified the pain.

Bybit Hack Shakes Investor Confidence

The crypto industry’s woes don’t stop at macroeconomic headwinds. On February 21, Bybit, the third-largest exchange by trading volume, was rocked for a staggering $1.5 billion Ethereum theft—the biggest hack in crypto history. Security researchers quickly pinned the blame on the North Korea-affiliated Lazarus Group, a notorious player in cybercrime. Bybit scrambled to contain the damage, securing 80% of the stolen funds through a bridge loan and assuring users their assets were safe. Yet the breach has left a deep open wound on investor confidence, coming at a time when the market could ill afford another blow. The fallout underscores the persistent vulnerabilities haunting even the biggest names in crypto.

President Milei and Memecoin Madness Adds Fuel to the Fire

Across the globe, Argentina’s President Javier Milei has delivered yet another black eye to the industry. His much-hyped Libra memecoin launched on February 14, soaring to a $4 billion valuation in mere hours before crashing into oblivion. Investors were left holding the bag, and political rivals seized the moment to call for Milei’s impeachment.

The fiasco has reignited criticism of memecoin mania, with detractors decrying its corrosive impact on an already fragile market. This self-inflicted wound has only deepened the sense of chaos enveloping crypto as it grapples with external pressures and internal missteps. In addition it’s drawn intense scrutiny to both Solana and memecoins, with lots of talk of corruption and insiders which hasn’t helped confidence any.

Even amid the wreckage, glimmers of hope persist. However, the market is currently a war zone, battered by tariffs, Fed restraint, hacks, and hype gone wrong.