25-2-2025 – The digital asset market has witnessed a sharp decline, with leading currencies plunging dramatically over a 24-hour period. The downturn, which began Monday and continued into Tuesday, reflects a pervasive bearish sentiment and notable absence of positive catalysts to bolster market confidence.
Particularly hard hit was Solana’s SOL, which tumbled a staggering 14%, contributing to catastrophic weekly losses exceeding 20%. Other prominent cryptocurrencies weren’t spared, with dogecoin, xrp, and ether all suffering declines surpassing 8%.
Bitcoin, the flagship cryptocurrency, has broken below the critical $92,000 threshold for the first time since late November, potentially signalling the end of its consolidation phase that has kept the token trading between $90,000 and $110,000 in recent weeks. This downward pressure has sent ripples throughout the market, with overall capitalisation shrinking by 6.6% whilst the CoinDesk 20 index, which tracks the most liquid tokens, contracted by more than 7%.
Despite the gloomy outlook, industry experts suggest the negative sentiment may be exaggerated. Jeff Mei, Chief Operating Officer at cryptocurrency exchange BTSE, expressed bewilderment at current price levels, noting, “Bitcoin, Ethereum, and Solana shouldn’t be trading this far below their all-time highs.” He attributes the market downturn to American economic concerns, particularly regarding inflation and the Federal Reserve’s pause on interest rate cuts. However, Mei remains optimistic, suggesting recent weak economic data could prompt Federal officials to implement supportive measures.
The macroeconomic backdrop remains crucial to understanding the crypto market’s trajectory. Augustine Fan, who leads insights at SignalPlus, predicts that economic slowdown narratives will dominate short-term market discussions. Fan believes markets are experiencing a return to the “bad data is now good” paradigm, as attention shifts back to potential Federal Reserve easing measures. This realignment could potentially benefit both gold and Bitcoin in the coming weeks.
Economic data released earlier this month has compounded investor anxiety. January’s Consumer Price Index surged 0.5% month-on-month, significantly exceeding economists’ expectations of 0.3%. This alarming inflation indicator has prompted investors to seek refuge in cash positions or risk-off investments while awaiting clear signs of government intervention to stimulate economic growth.