Bitcoin And Altcoins Plunge : Temporary Dip Or Market Collapse ?

The cryptos are experiencing a new episode of brutal volatility, shaking a market already weakened by macroeconomic uncertainties. Solana collapses by 14 %, XRP and Dogecoin drop by over 8 %, while Bitcoin falls below $91,000. This movement, amplified by massive liquidation, raises questions about the resilience of these assets in the face of global economic pressures. Thus, the question now is whether this drop is a mere correction or the beginning of a trend reversal.

A brutal correction of altcoins and a Bitcoin under pressure

The crypto market is plagued by violent turbulence. Solana (SOL) drops 14 % in one day, bringing its weekly losses to over 20 %. This plunge is part of a generalized liquidation movement that also affects XRP, Dogecoin, and Ethereum, which are down by over 8 %. Indeed, the CoinDesk 20 index, which tracks the largest market capitalizations in the sector, reflects this trend with a decline of more than 7 % for the day.

Bitcoin, for its part, has plunged below the $92,000 threshold for the first time since November, threatening a potential bearish breakout after three months of consolidation between $90,000 and $110,000. Such a drop heightens tensions in the market, already weakened by the absence of clear bullish signals. “The current bearish sentiment may be exaggerated,” moderates Jeff Mei, COO of the BTSE exchange, who believes that upcoming macroeconomic decisions could offer a rebound.

Massive liquidations in cascade

In this climate of panic, liquidations are multiplying. Nearly one billion dollars of positions have been liquidated in 24 hours, according to CoinGlass data. Among them, $277 million concern long positions on Bitcoin, proof of a market caught off guard by the brutality of the movement. Altcoins are not spared either, with chain sales accelerating the correction.

This phenomenon is not unprecedented, as in a crypto market often dominated by leverage, such liquidations mechanically amplify downward movements. However, beyond the technical effect, this correction fits into a broader economic context that weighs on risky assets.

Indeed, Bitcoin has been trading between $90,000 and $110,000 for nearly three months, struggling to regain a sustainable bullish momentum. The Bitfinex Alpha report from February 24, 2025 highlights that “Bitcoin remains at a critical turning point after nearly 90 days of consolidation”. Furthermore, Bitfinex analysts note that “the momentum needed for a sustainable bullish break has been lacking, leading to a period of contraction and consolidation across almost all major crypto assets”.

In the last 24 hours, Bitcoin has dropped more than 4.5 %, reaching a low of just under $91,000 since late November, indicates CoinGecko. At the same time, the total market capitalization of crypto has fallen by 8%, from over $3.31 trillion to about $3.09 trillion.

A correlation with traditional markets and capital flight

If cryptos are plunging, it is not solely due to internal factors. The crypto market shows an increasing correlation with stock markets, which have also been declining in recent days. The S&P 500 is down 2.3 % over a week, while the Nasdaq drops by 4 %, indicating a growing risk aversion. This trend slows incoming flows into crypto, already affected by a decline in institutional interest.

As evidenced by the figures of Bitcoin ETFs, which recorded net outflows of $552.5 million over the past week. The easing of institutional demand, which drove the market up in 2024, is a critical signal for investors who hoped to see these new products sustainably support prices.

Inflation and Economic Uncertainties : A Detrimental Climate for Cryptos

While this correction seems brutal, it is not entirely unexpected. Inflationary tensions and the economic slowdown have contributed to a repositioning of capital towards less risky assets. Augustine Fan, head of analysis at SignalPlus, specifies that “the sentiment of economic slowdown dominates the markets, with strengthened correlations between stocks, bonds, and cryptos. This explains why we are observing this synchronized correction across all assets.”

In the United States, the latest consumer price index (CPI) figures show sustained inflation, with a 0.5 % increase over the month in January, compared to a forecast of 0.3 %. Such progress complicates the task for the Federal Reserve, which may have to extend its high interest rate policy, thus curbing appetite for speculative assets.

The announcement of new American tariffs on Canadian and Mexican imports, confirmed by Donald Trump during his speech with Emmanuel Macron, adds an extra layer of uncertainty. “This stagnation in traditional markets has echoed in cryptos,” explain analysts from Bitfinex, who emphasize that the American economy is undergoing a period of weakness marked by a decline in consumer confidence and a slowdown in growth.

The massive liquidation that shook Bitcoin, Solana, and XRP sheds light on the vulnerability of the crypto market to macroeconomic factors. While some observers deem this correction excessive and anticipate a rebound, others believe that caution remains necessary, as long as uncertainties about monetary policy persist. Such a situation reflects a market at a crossroads, oscillating between the optimism of long-term investors and the nervousness of short-term speculators. The coming days will be decisive: a rebound could restore confidence, while a continuation of the decline could exacerbate pressure across the entire sector.