The cryptocurrency market faced a steep 20.2% decline in February, with a mix of security breaches, geopolitical uncertainty, and a slowdown in memecoin activity triggering a wave of sell-offs.
According to Binance Research’s March “Key Trends in Crypto” report, the most significant factors behind the downturn included a record-breaking $1.46 billion hack on Bybit, mounting concerns over President Donald Trump’s trade war, and Bitcoin’s largest liquidation event since the 2022 FTX collapse.
Bybit Hack Shakes Investor Confidence
A major contributor to February’s market slump was the Bybit security breach, which resulted in hundreds of millions of dollars in losses. Attackers exploited vulnerabilities in the exchange’s withdrawal processing system, prompting Bybit to temporarily suspend withdrawals and launch an internal investigation. The incident followed a string of high-profile exchange breaches in recent months, further fueling concerns over crypto security risks.
The attack shattered confidence in centralized exchanges and prompted some traders to move their assets into self-custody solutions and decentralized exchanges (DEXs). Analysts have noted an uptick in DEX trading volume, reflecting a shift in market sentiment away from centralized platforms.
Bitcoin’s Flash Crash: $3 Billion Liquidated in 48 Hours
Bitcoin also took a heavy hit during the month, dropping 16% amid extreme volatility. Between February 24 and 26, the crypto market saw $3 billion in liquidations, marking Bitcoin’s largest price collapse since the FTX meltdown in 2022. This sudden drop was fueled by broader bearish sentiment in global financial markets and the liquidation of over-leveraged trading positions, exacerbating the downtrend.
Trump’s Trade War Adds to Market Uncertainty
Adding to the turbulence, President Donald Trump’s renewed trade war policies unsettled investors in both traditional and cryptocurrency markets. In February, Trump confirmed that new tariffs on Canada and Mexico would take effect in March, though some were later postponed to April.
The uncertainty surrounding these policies led to capital outflows from risk-on assets, including cryptocurrencies, further accelerating the market downturn.
Adding to this market’s volatility, President Donald Trump hosted a White House “Crypto Summit”, declaring the “war on crypto is over” and announcing the creation of a strategic Bitcoin reserve comprising cryptocurrencies obtained through criminal and civil forfeitures.
However, the lack of concrete regulatory clarity and the absence of active government cryptocurrency purchases disappointed investors. Additionally, Trump’s own cryptocurrency ventures, including the launch of personal “memecoins”, have faced significant value declines, further dampening market sentiment.
$LIBRA Token Collapse and the End of a Memecoin Frenzy
Another critical factor in the market’s decline was the controversy surrounding the $LIBRA cryptocurrency. On 14 February 2025, Argentina’s President Javier Milei publicly promoted $LIBRA on his social media platforms.
Following his endorsement, the token’s Market Capitalization soared over $500 million within 40 minutes. However, the founders, holding 70% of the circulating supply, sold their holdings abruptly, causing the token’s value to plummet by 85% within hours.
This event, perceived as a “rug pull” scam, led to significant losses for approximately 74,000 investors, amounting to an estimated $87 million. The scandal, dubbed “Cryptogate”, has sparked political turmoil in Argentina, with opposition parties calling for President Milei’s impeachment and legal investigations underway.
Quick Facts:
- The crypto market fell 20.2% in February, driven by the Bybit hack, Trump’s trade policies, and Bitcoin’s largest liquidation event since 2022.
- Bybit lost $1.46 billion in a record-breaking hack, linked to North Korea’s Lazarus Group, heavily impacting Ethereum’s price.
- Bitcoin dropped 16% in just two days, with over $3 billion in liquidations between February 24-26.
- Trump’s trade war caused broader market instability, leading to capital outflows from high-risk assets, including crypto.
