The February crypto sell-off sent shockwaves through the market, but the real story started long before that. Since December 8, 2024, altcoins have been quietly bleeding out, losing over a third of their collective value. While Bitcoin’s record-breaking rally grabbed headlines, a stealth bear market was already tightening its grip—hidden in plain sight.
The altcoin market capitalization peaked at $1.9 trillion in early December before plummeting to less than $1.2 trillion by late February—a stark contrast to the narrative of cryptocurrency resilience that dominated headlines through January. Market indicators now unanimously signal distress, with CoinMarketCap’s Fear and Greed index registering a decisively bearish 26 and data from Jamie Coutts showing 24 percent of the top 200 cryptos are at their yearly low.
During President Trump’s January 20 inauguration, the overall cryptocurrency market capitalization remained within 3% of its all-time high, creating an illusion of market health. This statistical mirage came courtesy of Bitcoin’s surge to approximately $108,800 that day—its highest recorded value.
“The day of Trump’s inauguration was clearly when investors had fully priced in their bullish expectations via BTC,” market analysis indicates. This optimism proved short-lived. By Tuesday, spot Bitcoin ETFs recorded their worst single day of outflows in history, accelerating a broader market decline.
Bitcoin itself has retreated significantly from January peaks, trading around $94,442 by late February. However, this 13% decline pales in comparison to the carnage across altcoin markets, where double-digit percentage drops became commonplace.
Security Breaches and Structural Pressures Accelerate Decline
The February 21 hack of cryptocurrency exchange Bybit delivered a devastating blow to already weakening market sentiment. Hackers extracted an estimated $1.5 billion worth of Ethereum tokens in what researchers call the largest cryptocurrency theft in history, exceeding the previous record by more than twofold.
“The Bybit hack is only the latest security breach that raises questions about the viability of crypto security,” The Motley Fool reported on February 25.
Solana, once considered a leading Ethereum competitor, lost nearly $50 billion in market value in February alone. Its decline stems partially from a scandal involving Argentina’s President Javier Milei and a collapsed memecoin, compounded by $1.72 billion of Solana tokens scheduled for unlock on March 1, according to research firm Messari.
Simultaneously, speculation grew that El Salvador—a pioneering nation in Bitcoin adoption—had paused its daily Bitcoin purchases since February 17, potentially linked to terms in its $1.4 billion loan agreement with the International Monetary Fund.
Analysts Foresee Selective Recovery Amid Extended Weakness
“Most altcoins won’t make it during the 2025 market cycle,” Ki Young Ju, founder and CEO of CryptoQuant, wrote on February 25. His analysis suggests only cryptocurrencies with potential ETF approvals, robust revenue-generating models and sustained investor attention will outperform. “The era of everything pumping is over,” he concluded.
Juan Pellicer, senior research analyst at crypto intelligence platform IntoTheBlock, identifies signs of market capitulation as “overleveraged positions are flushed out,” potentially signaling an approaching market bottom.
“Crypto is just weak, and has been for eight weeks,” noted Jeff Dorman, chief investment officer at Arca. “Only crypto is going lower. And that’s largely due to poor sentiment, exploitation from various memecoin failures, and lack of capital to support new token launches.”
Edward Chin, co-founder of Parataxis, provided additional context: “Everyone that is normally in this market is already fully-long alts, and any new dollars are going into BTC, which explains its relative strength and the persistence of BTC dominance.”
