Bitcoin Price Analysis: 3 Reasons BTC Plunged 25% to Hit 120-Day Lows in February 2025

Bitcoin price plunged as low as $78,256 of Friday, closing February with more than 25% loses. On-chain data trends suggest retail traders’ panic selling this was behind the latest BTC price downturn.

Bitcoin (BTC) Plunges to Lowest Since November 2024

Bitcoin (BTC) price extended its February losses further on Friday, weighed down by political and economic turbulence.

The majority of the bearish momentum stemmed from developments within the Trump administration, shaking investor confidence in risk assets.

In the last quarter of 2024, BTC price outperformed major financial assets as Trump’s pro-crypto stance fueled bullish sentiment.

His inauguration-day launch of a memecoin further amplified gains, driving Bitcoin price to new all-time highs in January.

However, after posting double-digit growth in Q4 2024, BTC price has faced intense sell pressure in February, with multiple macroeconomic and geopolitical factors fueling the downturn.

BTC price dropped 8% on Friday, briefly hitting $78,256 on Binance—its lowest level in over 120 days. Having opened February at $102,429, BTC price has now plunged 25%, as it closed the month just below the $84,000 mark, as depicted in the TradingView chart above

Why Did Bitcoin Price Plunge 25% in February 2025?

Beyond a “sell-the-news” event following Trump’s inauguration, several new bearish catalysts emerged throughout February, further weighing on Bitcoin price action.

1. DeepSeek’s Emergence Unsettles AI Markets, Triggering Sell-Offs

The AI sector’s turmoil has sent shockwaves across financial markets, contributing to BTC price volatility. DeepSeek, a major Chinese AI player, has challenged U.S.-based firms like OpenAI, raising fears of a prolonged AI arms race. This uncertainty escalated following NVIDIA’s positive earnings report on February 27, which paradoxically triggered a rapid sell-off in tech stocks. The bearish sentiment rippled into crypto markets, playing a crucial role in BTC price sinking to fresh 120-day lows within 24 hours.

2. Elon Musk’s D.O.G.E. Oversight Clashes With U.S. Regulators

Elon Musk’s new role as head of the Department of Government Efficiency (D.O.G.E.) has stirred significant controversy, contributing to market instability. Tensions between Musk and key agencies such as USAID, the U.S. Treasury, and the SEC have intensified, leading to investor uncertainty.

Financial markets have overheated as regulatory battles escalate, further undermining confidence in risk assets. The evidently contributed to Bitcoin’s 25% price dip in February 2025.

3. Trump’s Tariffs on Canada and Mexico Trigger Panic Selling

Trump’s surprise announcement of 25% tariffs on imports from Canada and Mexico sent shockwaves through financial markets, prompting investors to retreat from volatile assets. Following the hotter-than-expected February 13 CPI report, inflation fears surged, exacerbating risk-off sentiment. Investors, bracing for further inflationary pressures, have begun offloading BTC in favor of safer assets.

Julien Bittel, Head of Macro Research at Global Macro Investor (GMI)  also echoed this sentiment in a recent post on X.

“Everything happening in markets right now, especially in crypto, is a direct consequence of the tightening of financial conditions in Q4 last year.

When financial conditions tighten, liquidity gets drained, and economic surprises start to slow.”

• Julien Bittel, Head of Macro Research at Global Macro Investor (GMI), Feb 28, 2025

While BTC’s 25% decline in February aligns with tightening trends in global financial markets, on-chain data suggests that retail traders were the primary sellers during the latest downturn.

Santiment’s Daily Active Addresses (DAA) metric, which tracks unique addresses engaging in transactions, confirms increased retail sell pressure. BTC recorded 515,000 active addresses on February 23, but following Trump’s tariff announcement, this number surged dramatically.

For context, BTC’s DAA has exceeded 880,000 daily transactions since February 25, reaching a new 2025 peak of 882,000 on February 27, before settling at 875,000 on Friday. Such heightened activity during a downtrend strongly suggests that retail traders are driving the sell-off, applying downward pressure on Bitcoin price.

With BTC price consolidating near 120-day lows, investors are closely watching key support levels. If selling pressure persists, Bitcoin price could test the $75,000 level in the coming days. However, a potential rebound could emerge if macroeconomic conditions stabilize or institutional inflows resume.

For now, retail-driven selling, geopolitical uncertainty, and inflation fears remain dominant themes shaping BTC price action in early 2025.

BTC Price Forecast: Bulls Risks Deeper Correction Below $80K as More Sell Signals Emerge

Bitcoin price forecast charts show BTC struggling near $84,344 after an extended downtrend, with sell signals intensifying. The Bollinger Bands have widened, indicating increased volatility, while Bitcoin trades below the midline at $93,607. A rejection from this level could confirm bearish continuation toward the lower band at $83,478.

The Top Bottom Indicator recently flashed a sell signal, mirroring the previous instance in January that led to a steep correction. If history repeats, Bitcoin could extend losses further. Volume Delta also reflects sustained negative momentum, with declining green bars and increasing red, suggesting persistent selling pressure.

However, Bitcoin’s price has yet to break decisively below the lower Bollinger Band, indicating potential for a relief bounce.

In the near-term in BTC price holds above $83,500, bullish momentum could push it back toward $90,000. However, failure to reclaim $86,000 could trigger another decline toward $80,000, especially as  bearish sentiment is expected to intensify as Trump’s tariffs on Canada and Mexico take effect on March 1.