Crypto Market Report: Resilience tested by volatility and hacks

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Research overview

February 2025 was a month of sharp market shifts, challenging the resilience of cryptocurrencies amid macroeconomic uncertainty, regulatory shifts, and security breaches. Following January’s bullish momentum, investor sentiment weakened as Bitcoin fell below $90K, Ethereum struggled with ETF-driven outflows, and institutional participation declined.

The month was defined by:

  • Macroeconomic pressures shaping investor sentiment: Inflationary concerns, with U.S. inflation hitting 3.3% YoY, delayed expected Federal Reserve rate cuts. Trump’s 25% tariff announcement on Canada & Mexico fueled global financial uncertainty, impacting risk-on assets like crypto.
  • A shift in institutional behavior: While ETF inflows remained positive in early February, net flows turned negative mid-month, resulting in a sharp decline in total assets under management across crypto investment products.
  • Security vulnerabilities rattling markets: The Bybit hack ($1.4B stolen) marked the largest security breach in crypto history, triggering panic across centralized exchanges. Simultaneously, DeFi platforms saw renewed scrutiny after the Infini Protocol exploit ($50M) raised concerns over insider risks.
  • Altcoin market seesaws between gains and corrections: AI and tokenized asset sectors saw continued investor interest, but an early altcoin rally was erased by late-month sell-offs. Solana, Dogecoin, and Cardano all suffered steep declines.
  • NFT & metaverse recalibration: The market saw a downturn in NFT trading volume, yet an increase in unique user engagement suggested a shift toward more organic adoption beyond speculative trading. Meanwhile, Meta’s $50M investment in Horizon Worlds reinforced long-term institutional interest in the metaverse.
  • Regulatory discussions take center stage: The SEC’s Crypto Task Force (led by Hester Peirce) signaled intent for clearer policies, while institutional players watched the SAB 121 rollback as a potential catalyst for U.S. banks exploring crypto custody.
  • The Trump effect on Bitcoin’s future: AMBCrypto’s investor survey revealed mixed sentiment on Trump’s pro-Bitcoin stance, with expectations of potential regulatory shifts but lingering skepticism about real policy implementation.

Thematic market shifts

  • From stability to uncertainty: Institutional optimism from January faded as macro risks and security vulnerabilities shaped investor behavior.
  • Diverging retail & institutional trends: Retail traders remained more active during market dips, while hedge funds and institutional investors took a cautious stance or pulled back exposure mid-month.
  • Security breaches redefine trust in crypto: The Bybit hack accelerated industry-wide discussions on exchange security frameworks and risk mitigation in centralized platforms.
  • Macroeconomic headwinds vs. crypto adoption: External financial pressures, including inflation concerns and trade policies, played a greater role in crypto’s February downturn.
  • DeFi and RWAs hold strong despite market turmoil: While the market saw turbulence, real-world asset (RWA) tokenization and DeFi engagement remained resilient, signaling long-term growth potential.
  • Trump’s Bitcoin stance: A catalyst or campaign rhetoric? While excitement around Trump’s pro-Bitcoin rhetoric continued, investors remained divided on whether his stance would translate into tangible regulatory action.

Looking ahead

As the market moves into March 2025, investors will be watching:

  • Bitcoin’s attempt to reclaim the $100K level, following February’s sharp correction.
  • Ethereum’s upcoming Pectra upgrade, which could influence network development and institutional interest.

    • Market impact or political hype?

    • AMBCrypto’s survey of 4K+ investors revealed mixed opinions on Trump’s pro-Bitcoin stance:
    • 43.3% believe he genuinely supports Bitcoin.
    • 31% see it as a mix of political strategy and belief.
    • 65.7% expect Trump’s policies to drive major changes in crypto adoption.
    • Discussions on a U.S. Bitcoin reserve surfaced, though still in early stages.

    Bitcoin’s volatility: ETF outflows & macro pressures weigh on price

    • BTC slipped below $90K for the first time since November 2024, with a mid-month liquidation event exceeding $1.5B.
    • ETF flows turned negative: Grayscale Bitcoin Trust (GBTC) outflows continued, weakening BTC’s support.
    • BlackRock’s iShares Bitcoin Trust (IBIT) maintained $60B+ in AUM, leading ETF inflows.
    • The Crypto Fear & Greed Index dropped to 21 (“Fear”), signaling a sentiment shift.

    Ethereum struggles amid ETF uncertainty & market sell-off

    • ETH’s price plunged from $3,500 to $2,337, closing the month at $2,413.
    • Ethereum ETFs saw daily outflows exceeding 16,000 ETH, reducing institutional exposure.
    • 30M+ ETH staked remained a positive metric, reinforcing network security despite price volatility.

    Altcoins: Early rally meets harsh reality

    • AI & tokenized asset sectors remained resilient, with Fetch.ai & Render Network leading AI token performance.
    • Story (IP) surged +205%, Sonic (S) +60%, and Maker (MKR) +58% in early February.

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2025-02-27 15:32