Bitcoin price experienced a significant drop this week amid a widespread selloff in risk assets. The world's largest crypto token fell more than 8% in the past two days to just above $88,000 (€83,626) during Wednesday's Asian session, the lowest level since 15 November.
Bitcoin slumped nearly 20% from its peak amid Trump's inauguration on 20 January. Alongside the Bitcoin selloff, other major tokens, such as Ethereum, Cardano, and Solana, have all declined by more than 10% during the same timeframe.
Risk-off sentiment has been a primary driver of the sharp decline in cryptocurrencies as economic data deteriorated in the US, while Trump's expanding tariff threats and a series of political developments increased uncertainties in the financial markets.
Additionally, a major crypto hack targeting the Dubai-based exchange Bybit has raised concerns about blockchain security.
Markets were also awaiting a fresh catalyst to reignite enthusiasm in cryptocurrencies.
The US technology sector, which typically moves in tandem with cryptocurrencies, was the worst performer on Wall Street, recently.
Tesla's shares tumbled more than 8% on Tuesday following news that its car sales nearly halved in Europe last month, weighing on the broader sector performance.
Nvidia's earnings will be closely watched later today.
Additionally, the recent US economic data showed that consumer confidence fell the most since August 2021 this month, reflecting a weakened economic outlook amid Trump's slew of tariff announcements, particularly on the US's two biggest trading partners-Mexico and Canada.
Signs of a resurgence in inflation, accompanied by the Fed's hawkish shift, have also weighed on sentiment.
"On the surface, this is about weak data and the uncertainty stemming from the Trump administration's policy agenda and how that may impact economic activity," Kyle Rodd, a senior market analyst at Compital.com Australia, wrote in an email.
Risk-off dominated the global markets across all asset classes on Tuesday, with equities extending losses, oil prices tumbling, gold retreating, and the US dollar weakening.
Government bond yields fell sharply, with the US 10-year Treasury yield sliding to its lowest since mid-December last year. Government bonds are considered a safe-haven asset as yields move inversely to bond prices.
Investor confidence in cryptocurrencies has been shaken following the largest-ever crypto hack targeting Bybit on 21 February, in which nearly $1.5 billion worth of Ether was stolen.