Market Wipeout Worsens as Sentiment Shifts

The total cryptocurrency market capitalization tumbled by 12.3% to $2.85 trillion, marking one of the most significant single-day losses in recent months.

Optimism over former President Trump's proposal for a strategic cryptocurrency reserve quickly faded as investors reassessed its feasibility, leading to widespread sell-offs and over $1 billion in liquidations.

The total cryptocurrency market capitalization tumbled by 12.3% to $2.85 trillion, marking one of the most significant single-day losses in recent months. Bitcoin (BTC) fell by 9.8% to $83,694, while Ethereum (ETH) plummeted 14.8% to $2,083. XRP also saw a steep 17.7% decline, settling at $2.30. Other major altcoins, like Solana (SOL) and Cardano (ADA), suffered losses exceeding 20%.

The Ripple (XRP) price declined 13.64% in the last 24 hours at press time. Source: XRP Liquid Index (XRLX) via Brave New Coin

The sudden sell-off triggered a wave of liquidations, with CoinGlass data revealing that over 311,000 traders were affected. Total liquidations reached $1.08 billion, with Bitcoin accounting for $398.49 million, Ethereum $209.73 million, Solana $70.49 million, XRP $62.89 million, and Cardano $44.15 million.

Trump's Reserve Plan Stirs Debate

Trump's proposal for a strategic cryptocurrency reserve was initially met with enthusiasm, particularly among Bitcoin and Ethereum supporters. His Truth Social post announced that the reserve would include Bitcoin, Ethereum, XRP, Solana, and Cardano.

While Bitcoin and Ethereum were positioned as the foundation of the reserve, the inclusion of altcoins raised concerns about the plan's legitimacy and long-term viability.

10x Research argues that Fed policy outweighs Trump’s crypto stance for Bitcoin’s price action. Source: 10X Research via X

According to 10X Research, the market overreacted to Trump's post, and legislative approval could take months. "Rather than a genuine push for regulatory clarity, this rally appears to have been an opportunity for profit-taking," the analysts stated.

Industry Leaders Express Skepticism

Several prominent figures in the crypto industry expressed skepticism towards Trump's plan. Among them was Anthony Pompliano, founder of Professional Capital Management, who criticized the initiative in a letter to investors.

"Even though Solana is our second-largest crypto position, this decision on a broad strategic reserve is an unforced error that could ultimately harm taxpayers," he wrote.

Bitcoin is the only digital asset fit for a Strategic reserve, meeting the gold-like standard of hard money. Source: Tyler Winklevoss via X

The Winklevoss twins, co-founders of Gemini, also cast doubt on the reserve's structure. "Only Bitcoin meets the necessary criteria as a reserve asset," they stated on X, suggesting that the inclusion of altcoins added unnecessary risk.

"This combination of assets feels like a mashup of donor interests and economically irrational suggestions by Trump’s team. It’s economically illogical to hold illiquid, unrisky assets (gold) alongside risky, liquid assets (crypto). Both tranches should prioritize a single best-in-class asset, which is Bitcoin for the liquid tranche and potentially gold for illiquid tranche. This combo is a mess!" the twins added.

Peter Schiff, a long-time Bitcoin critic, went even further, calling the proposal "the biggest crypto rug pull of all time." He urged Congress to investigate whether Trump's associates or donors benefited financially from the announcement.

Bitcoin Faces Its Worst February in a Decade

The recent downturn adds to Bitcoin's struggles, which saw February close as one of its worst-performing months in history. Bitfinex analysts logged a 17.39% loss for Bitcoin, its steepest February drop since 2014. The decline, which saw Bitcoin fall 28.3% from its January high of $109,590, has been added to by massive withdrawals from Bitcoin ETFs, which amounted to $1.1 billion on February 25.

Bitcoin (BTC) price dropped 8.4% to $83,602 in the last 24 hours at press time. Source: Bitcoin Liquid Index (BLX) via Brave New Coin

Historical data shows that Bitcoin generally performed well during February, with an average increase of 13.12% since 2013. The fall this year is the largest post-halving February drop ever, and it has investors concerned about the short-term trajectory of the asset.

Road to Recovery Hinges on Institutional Interest

Bitcoin and the broader crypto market must get over the obstacle of recovering bullish momentum. Market analysts said that will depend on macroeconomic drivers,