The recent decline in the market can be attributed to the following 5 main reasons:

1. Security Incident Shock

The world's second-largest cryptocurrency exchange, Bybit, was hacked on February 21, with hackers stealing over $1.5 billion worth of more than 400,000 ETH and stETH. This incident exposed security vulnerabilities in the industry, leading to serious doubts among investors about the safety of the cryptocurrency market and triggering panic selling.

2. Regulatory Policy Uncertainty

The South Dakota legislature postponed a bill, HB 1202, that could allow the state to invest in Bitcoin. This event sent signals of regulatory uncertainty, shaking the market's expectations for institutional capital entry.

3. Macroeconomic Factors

The Federal Reserve has released “hawkish” signals, suggesting that high interest rates may persist until 2025, and even the possibility of further rate hikes cannot be ruled out. The strengthening dollar index has suppressed the performance of risk assets. The aggressive tariff policies proposed by former U.S. President Trump have caused turbulence in traditional financial markets, prompting investors to sell high-risk assets for safety, with Bitcoin being the first affected.

4. Market-Specific Factors

Bitcoin has accumulated a rise of over 30% since the beginning of the year, indicating significant overbought pressure. On February 28, Bitcoin's price briefly fell below $80,000, marking the lowest point since November 2024. The breach of key support levels triggered a large number of leveraged positions to be forcibly liquidated, resulting in a “long liquidation” effect that accelerated the price decline.

5. Impact of Capital Outflows

On February 26, BlackRock's iShares Bitcoin Trust (IBIT) recorded the largest single-day capital outflow since its inception. Over the past six days, the net outflow of funds from Bitcoin ETFs has been approximately $2.1 billion. The significant capital outflows have created substantial downward pressure on Bitcoin's price.