Major cryptocurrencies continued their slide Friday, with Bitcoin dropping 1.1% to $66,464, Ethereum falling 1.3% to $1,944.76, and XRP sliding 1.7% to $1.35. This marks the third straight week of declines as a toxic combination of hawkish Federal Reserve rhetoric, ETF outflows, and tariff-driven inflation fears crushes appetite for risk assets.
The entire crypto market has shed $2.1 trillion in value from recent peaks. Friday alone saw $775 million in liquidations, mostly hitting long positions as funding rates turned negative and open interest collapsed by 28%. Bitcoin briefly broke below $66,000 during intraday trading, testing critical support at the 200-week exponential moving average. Meanwhile, Ethereum and XRP ratios against Bitcoin hit multi-year lows, showing that alternative cryptocurrencies are underperforming even more severely.
The Macro Picture Is Brutal
The fundamental drivers behind this selloff are all macro. Federal Reserve Chair Kevin Warsh’s confirmation speech hammered home that there will be no interest rate cuts until inflation sustainably reaches the 2% target. That’s pushing expectations for any easing out to Q4 2026 and strengthening the dollar index to 108.
Trump’s tariff offensive isn’t helping. The 25% tariffs on Mexico and Canada take effect March 1st, with a phased 60% levy on Chinese goods rolling out afterward. Forecasts now expect consumer price inflation to spike to 4.2%, which delays any potential Fed pivot and hammers leveraged trading positions across all risk assets.
U.S. Bitcoin ETFs posted $1.09 billion in weekly outflows—the largest exodus since November. This reverses the inflows that BlackRock and Fidelity had been seeing as institutions rotate into gold instead. The correlation between Bitcoin and equities is breaking down in strange ways, with the S&P 500 down 1.2% while crypto falls even harder.
Global manufacturing indicators at 47.8 confirm recession signals, amplifying the risk-off cascade that’s pulling everything down.
Technical Breakdown
The charts are showing serious damage. Bitcoin’s Relative Strength Index is deeply oversold at 28, which normally suggests a bounce is coming. But the MACD is showing bearish divergence, and a death cross (where the 50-day moving average crosses below the 200-day) confirms the momentum has shifted negative.
Immediate support for Bitcoin sits at $64,000 (the 50-day EMA), with the next level down at $58,000 matching June lows. Ethereum is testing $1,900 support from June 2024, aligning with what technical analysts call an inverted head-and-shoulders pattern pointing to more downside. XRP has broken through $1.37 April lows and is now eyeing the $1.25 flash crash zone.
Bitcoin dominance—its share of the total crypto market cap—has climbed to 58%, the highest since November. This means money is draining out of alternative cryptocurrencies even faster than it’s leaving Bitcoin. Funding rates for XRP have hit -0.028%, the lowest in 10 months. While negative funding historically precedes rallies, right now it just signals current despair.
Institutional Stress Is Spreading
The stress on crypto institutions is accelerating. BlockFills halting withdrawals triggered fears of contagion spreading through prime brokerage services. Coinbase posted a $95 million loss in Q4, reflecting a 62% plunge in trading volume. Bitcoin miner hashrate is down 12% as operations with all-in costs around $40,000 are forced to shut down because they’re unprofitable at current prices.
Hedge funds have liquidated $4.2 billion in futures positions due to margin calls. Short interest has spiked 35%. Exchange reserves are at four-year lows, which shows long-term holders are committed to holding, but $12 billion in ETF redemptions are overwhelming any spot buying demand.
Where Things Could Go From Here
The bears are targeting Standard Chartered’s $50,000 floor for Bitcoin—a level that aligns with the realized price (average cost basis of all holders) and the 200-week moving average. The final capitulation scenario would involve miners being forced to sell, and digital asset treasury companies like MicroStrategy (which has already paused its ATM program) facing forced liquidations.
Additional downside risks include Japanese yen carry trade unwinding, capital outflows from China, and new stablecoin caps from the EU’s MiCA regulations. Alternative cryptocurrencies face even harsher potential drops—Ethereum could hit $1,725 based on an inverted cup-and-handle pattern, XRP might test $1.25-1.26, and Dogecoin could revisit yearly lows around $0.08.
The bull case rests on oversold exhaustion. Bitcoin’s MVRV Z-Score at 1.8 shows undervaluation matching previous cycle bottoms. The halving economics remain intact with block rewards at 3.125 BTC. The ETF infrastructure holding $118 billion in assets positions the market for a potential rebound once the Fed does eventually pivot.
XRP’s low funding rate preceded an 82% rally in 2025. Recent institutional inflows of $63 million suggest accumulation is happening. RSI divergences and other cycle indicators warn against aggressively chasing short positions. A reclaim of $70,000 would invalidate the immediate downside case.
How to Navigate This
For long-term holders, the strategy is averaging down at key logarithmic support levels. Active traders are shorting rallies below the $68,000 EMA with stops at $64,000. Speculators are waiting for the potential $50,000 capitulation point to enter for the 4x cycle recoveries that have historically followed such extremes.
The most important lesson: avoid leverage. The $775 million in liquidations underscore just how dangerous borrowing is in this environment. Portfolio diversification might look something like 60% Bitcoin, 25% Ethereum, and 15% stablecoins to weather the storm.
The Bottom Line
This crypto winter is testing everyone’s conviction. Macro factors are overriding on-chain narratives and fundamental analysis. The combination of Fed persistence plus tariffs equals prolonged pain. The timing of any Fed pivot will dictate when the bounce comes.
Capitulation clears out weak hands, and survivors compound their gains afterward. Bitcoin faces a critical test at the $50,000 level if it gets there. Alternative cryptocurrencies will bleed disproportionately—they always do in downturns.
History favors asymmetry—those who survive the drawdowns position themselves for massive gains in the next cycle. But the downtrend persists until Bitcoin breaks back above $64,000 convincingly. Oversold bounces will tempt traders into traps.
Navigate wisely. Patience gets rewarded, but only if you survive to see the recovery.
