The cryptocurrency market is facing a massive crisis after more than $2.24 billion in investments were liquidated on February 3, 2025. The market is expected to take until next April to recover from these huge losses. Analyst Matthew Hyland described these liquidations as “the largest liquidation in cryptocurrency history,” noting that this pressure adds significant challenges to the market.
In his post on the “X” platform, Hyland stated that altcoins are unlikely to reach their previous December levels for at least two months. This sharp decline in the market coincided with increasing global trade tensions, especially US President Donald Trump’s threats to impose tariffs on Canada, Mexico, and China. Although negotiations suspended the tariffs on Canada and Mexico, this escalation negatively affected financial markets.
Hyland recalled that the market did not witness a quick recovery after previous crises such as the collapse of “Terra” and “FTX” in 2020 and 2022. He added that any rapid recovery in the market this year will be very difficult and will include extreme volatility.
For his part, Ben Zhou, CEO of Bybit, confirmed that the value of the liquidations could range between $8 billion and $10 billion, which further complicates the current situation. He also added that global economic concerns contribute to increasing uncertainty in the market. Therefore, the market outlook looks bleak in the short term, which calls on investors to wait before making new decisions.
Trump administration pushes to support regulations for cryptocurrencies
David Sachs, a leading expert on artificial intelligence and cryptocurrencies, Tim Scott, Chairman of the Senate Banking Committee, and French Hill, Chairman of the House Financial Services Committee, along with other members of Congress present at the digital assets press conference, announced the formation of a working group tasked with developing a regulatory framework for digital assets.
Cryptocurrency Price Forecast: Bitcoin, Ethereum, and Ripple
Bitcoin: Market expectations suggest that Bitcoin will remain weak despite repeated attempts to recover. On February 5, Bitcoin was trading around $97,000, a level lower than its previous value. David Sachs, a prominent cryptocurrency expert, noted that the US Bitcoin reserve will be subject to valuation, which could have an impact on the market.
Bitcoin has seen a sharp decline in recent sessions, hitting a low of $91,231 in early Asian trading before recovering slightly. However, Bitcoin failed to hold the $100,000 level, leading it to drop by 3.52% the following day.
Bitcoin Future Forecast: If Bitcoin continues its downward trajectory, the market could see a further decline that could extend to test the important psychological support level at $90,000. However, if Bitcoin can find support at $100,000, it could continue to recover and retest highs such as $106,012.
Ethereum: As for Ethereum, the market is showing clear signs of weakness. After Ethereum was rejected around the downtrend line on February 3, its price dropped by 13.87%. On Monday, February 5, the price reached $2,125 before recovering slightly. However, the next day, it failed to maintain its recovery and closed at $2,731.
Ethereum Future Outlook: If the price continues to decline, the $2,359 level is a crucial support level. If this support is broken, the decline could extend to $1,905. Indicators such as the Relative Strength Index (RSI) on the daily chart are also indicating strong downward pressure, reinforcing the negative scenario. In case of a recovery, the $3,000 level could be the next target.
Complementary Outlook and Reasons for the Decline: Global Crises and the Impact of Tariffs
Ripple: Ripple (XRP) is also facing significant challenges. It has fallen off the uptrend line it has been holding since early January. On Sunday, February 4, Ripple reached $1.77, closing at $2.70 the next day. But after that, Ripple continued to decline by 6.40% on Tuesday.
Ripple Future Outlook: If Ripple’s downtrend continues, it could test the daily support level at $1.96. If it breaks this level, Ripple could extend its decline to test the weekly support level at $1.40. At the same time, indicators such as the Relative Strength Index (RSI) are pointing to an oversold level at 38, reflecting strong bearish momentum.
Global economic crises, such as the escalation of trade tensions between the United States and China, show that these challenges negatively affect cryptocurrencies. The threat of tariffs on Canada, Mexico, and China has created uncertainty in financial markets. Although these threats temporarily suspended, the cryptocurrency market still shows evident impact.
Challenges ahead for the cryptocurrency market
If these global economic crises continue, the challenges facing the cryptocurrency market are likely to worsen. Although some analysts expect a slight recovery in the first half of 2025, many indicators suggest that the market will remain weak for a long time. The market may need more time to fully recover, which means that traders may face additional price fluctuations before the market stabilizes.
What should investors do?
In these difficult times, experts advise investors to exercise caution and take strategic steps before making any new investment decisions. It is best to stay away from leverage for the time being, and focus on analyzing the market carefully, taking into account the future trends of Bitcoin, Ethereum, and Ripple.
