Cryptocurrencies Closed February with Losses of Up to 37%
The cryptocurrency market faces an uncertain outlook, impacted by widespread declines, global economic tensions, and erratic trade policies, raising concerns about its short-term recovery.
Cryptocurrencies ended February with sharp losses, reaching as much as 37%. However, the overall picture was less negative for the market’s leading digital assets. Despite significant volatility that kept U.S. investors on edge, Bitcoin’s decline was relatively modest compared to the top 20 altcoins. Additionally, it showed greater resilience than Ethereum, its primary competitor, which recorded a loss exceeding 18%.
A Challenging Context for Cryptocurrencies
These downturns followed a week of notable losses in the U.S. stock market, largely influenced by recent macroeconomic data and the ongoing U.S. tariff war. The Personal Consumption Expenditures (PCE) Price Index, a key inflation measure, remained steady at 2.5% in January, aligning with analyst forecasts. Meanwhile, the core PCE rate, which excludes food and energy, unexpectedly rose by 0.1 percentage points to 2.8%.
The Federal Reserve (Fed) closely monitors this indicator to guide its monetary policy, and this unexpected increase could further complicate potential interest rate cuts in the coming months. Notably, the central bank has revised its inflation forecasts upward while lowering its growth projections, likely due to the aggressive trade policies of the Trump administration.
Additionally, the Atlanta Fed’s GDPNow model now predicts a 2.8% contraction in the U.S. economy for the first quarter—or a 0.5% decline when adjusted for gold imports and exports—fueling fears of stagflation and a possible recession.
Meanwhile, markets continue to assess the impact of President Donald Trump’s tariffs on developed economies. In recent months, Wall Street indices have experienced significant declines, exerting downward pressure on risk assets such as cryptocurrencies amid growing concerns over an economic downturn in the U.S.
On Sunday, Trump announced new tariffs on Russia unless the country reaches a peace agreement with Ukraine, adding further uncertainty to global markets.
How the Leading Cryptocurrencies Performed in February:
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