Bitcoin Experiences Largest Weekly Reduction Since FTX Collapse In 2022

JAKARTA Bitcoin has experienced a sharp decline to reach its lowest level since November 2024 and is preparing to record its biggest weekly decline in more than two years. This decline comes amid massive sell-offs in technology stocks due to slow economic tariff and growth concerns, as well as negative sentiment exacerbated by hacking of USD 1.5 billion (IDR 24.75 trillion) and uncertainty in crypto policy in the United States.

The world's largest cryptocurrency by market value fell to 7% on Friday 28/February to the level of 78,273 (Rp1.29 billion), the lowest level since November 10, and was on the path of weakening for five consecutive days. Overall, Bitcoin has lost 16% in the past week, making it the biggest weekly drop since the collapse of the FTX crypto exchange in November 2022. According to Coinecko data, the overall crypto market has lost nearly half a trillion dollars (Rp8,250 trillion) in the past week.

Senior analyst at City Index, Matt Simpson, revealed that inflationary pressures and the weakening outlook for economic growth, as well as US President Donald Trump's tariff policy, have put pressure on the crypto market.

"Inflationary pressure is getting higher, growth prospects are weakening, and Trump rates remain in effect. In addition, Trump's attention is not focused on crypto deregulation, so Bitcoin traders are not happy," Simpson said.

Bitcoin is often in line with risky assets such as technology stocks, which tend to rise when investors are optimistic about economic growth. The Nasdaq index, which is full of technology stocks, has also decreased to its lowest level since November 2024.

Investors fear that US economic appeal is starting to fade and Trump's tariff policy could trigger higher global inflation and slow economic growth. In addition, Nvidia's giant AI company's financial results are also considered negative by investors, adding to pressure on the technology and crypto markets.

The current situation is in stark contrast to conditions in mid-January 2025, when Bitcoin almost touched the US$110,000 (Rp1.82 billion) level thanks to optimism that the Trump administration will support Bitcoin's strategic funding and loosen regulations.

However, apart from the appointment of pro-crypto officials at the beginning of his administration, no concrete policies have been announced to support the crypto industry. As a result, Bitcoin has now fallen by about 20% from its highest level.

"The drop in the price of Bitcoin shows that positive sentiment from pro-crypto administration and the support of well-known figures has ended," said Joshua Chu, Co-Chair of the Hong Kong Web3 Association. "It is clear that Bitcoin is a risky asset, not a hedge against inflation or digital gold as is often claimed."

Meanwhile, Ethereum (Ether), the second largest cryptocurrency by market cap, fell 6% to the level of 2,149.38 (Rp35.46 million), the lowest level since January 2024.

The digital token linked to Trump has also experienced a drastic decline. The "TRUMP" token launched after he took office has lost 50% of his value, while his wife's "MELANIA" token has fallen to 90%.

Investors have also started withdrawing their funds from Bitcoin exchange-traded funds (ETF). US-listed Bitcoin ETFs experienced an outflow of US$2.27 billion (Rp37.46 trillion) in the past week.

Bank of America analysts noted on Friday, February 28 that the daily average price of Bitcoin, which has struggled to penetrate the $97,000 level since November, is an early sign of a "crypto bubble" that is starting to break.

Most of the hype in the crypto industry over the past few years has come from young influencers and tech entrepreneurs who are often dubbed "crypto bros". However, with the deteriorating market sentiment, the euphoria seems to be starting to fade.

In addition to macroeconomic factors, the crypto market was also rocked by a massive hack on Dubai-based crypto exchange Bybit. Last week, Bybit confirmed that hackers stole Ethereum worth about $1.5 billion, which is suspected of being the largest crypto hack in history.

"This is a combination of a variety of macro factors, including higher rates, geopolitical uncertainty, and Bybit hacking that further erodes investor confidence", said Total Conceicao, Chief Strategy Officer at digital wallet company Metasig.

The drop in Bitcoin prices also has an impact on the shares of companies linked to the crypto industry in pre-market US trading.

Coinbase Global shares, the largest crypto exchange in the US, fell 2.3%. The company, known as the largest Bitcoin buyer, MicroStrategy, has also experienced a similar decline.

In addition, shares of crypto mining companies such as Riot Platforms Inc and MARA Holdings fell by around 3.5%, respectively.

With market conditions continuing to volatile, investors are now awaiting further steps from the Trump administration and macroeconomic developments that could affect the direction of Bitcoin movement and the overall crypto market.