If we look at the market capitalization of cryptocurrencies, we find that it has lost more than 7.5% of the total capital since last Friday morning, in less than a week, noting that the crypto market capitalization maintained levels above $3.4 trillion since the beginning of the year. However, the recent downtrends have dropped it below $3 trillion, a decline of more than $250 billion from last Friday.

In just the past 24 hours, $150 billion was liquidated from the cryptocurrency market due to a violent sell-off that led to a strong collective drop in major coins as well as meme coins.

The drop led to a sharp slide in Solana, which has fallen 25% since last Friday, from levels of $180 to a current low of $135. Solana is affected by the frenzy of meme digital coins being created on its network, the latest being the Libra coin of Argentine President Javier Milei, which is known as the largest fraud in crypto history after liquidating more than $4.4 billion in hours. It was the third political meme coin on the Solana network causing a stir and witnessing significant losses for many individual cryptocurrency traders after the Trump and Melania coins, which ended with a sharp decline after a rapid breach.

After the popularity of meme coins started to fade, Solana also experienced a noticeable decline. Initially, Solana's sell-off was isolated from Bitcoin's movement, but as the S&P 500 index began to decline on Friday, Bitcoin joined the downward wave.

As shown below, the decline in the S&P 500 was accompanied by an acceleration in Bitcoin selling. Today, Bitcoin lost its relative strength after breaking the support level of $98,000 and is now below $90,000.

Citadel's change in stance towards cryptocurrencies

Strangely, this decline came just hours after Citadel Securities, with a market value of $65 billion, announced its plans to become a liquidity provider in the Bitcoin and cryptocurrency market. However, the markets treated this news as a "sell the news" event.

Bybit breach undermines confidence

The Bybit platform breach on February 21 weakened market sentiment, as Arkham Intelligence announced that this breach is "the largest financial theft in history." The losses were worth more than double the previous largest breach in cryptocurrency history, the PolyNetwork theft worth $611 million in August 2021.

The notable weakness in Ethereum has increased pressure on cryptocurrency markets in general. Repeated breaches lead to a deterioration of investor confidence in these markets.

Liquidity decline and market fluctuations

With the return of volatility to the stock markets, high-risk assets like Bitcoin are experiencing a decline. We witnessed historically high levels of risk appetite in 2024 and early 2025, but the current decline in this appetite means a reduction in liquidity available for cryptocurrency markets.

There is no single specific factor behind the current decline in cryptocurrency markets, but rather a combination of factors that have led to a decrease in liquidity. Cryptocurrency markets need liquidity to grow and thrive.