Cryptocurrency Market Declines by $325 Billion in February 2025

TLDR

• Cryptocurrency market cap dropped by $325 billion in February.
• Bitcoin and Ethereum recorded losses up to 15% each.
• Open interest in derivatives fell from $235.9 billion to $145.1 billion.

In the last week of February 2025, the cryptocurrency market saw a significant decline, with a $325 billion market cap reduction according to a report by The Kobeissi Letter. Within just 24 hours, the market experienced a $150 billion drop, heavily impacting major crypto assets like Bitcoin (BTC), Ethereum (ETH), Solana, and meme coins.

This market-wide sell-off was attributed to high leverage in derivatives, causing widespread pressure across the sector. Unlike previous incidents, this decline wasn't linked to a single entity or project but represented a larger market trend.

Impact on Major Cryptocurrencies

Among the affected assets, BTC and ETH were hit significantly, recording losses of up to 15%. Solana faced a decrease of 22% since the reported Friday, with other altcoins and meme coins also suffering substantial declines.

The downward trend in February parallels a separate market event in October 2025, when President Donald Trump announced 100% tariffs on Chinese imports. This announcement precipitated a $150 billion liquidation in crypto derivatives, exacerbating losses on major tokens and pushing investors into a risk-off mode.

Market Reactions and Derivatives Liquidations

The October 2025 shock led to extensive derivatives liquidation, affecting platforms such as Binance, OKX, Bybit, and Bitget. Open interest fell sharply from $235.9 billion to $145.1 billion, impacting primarily BTC and ETH with price drops between 10-15%, and causing deeper losses for smaller and long-tail tokens, which dropped by 50-80%.

However, despite widespread losses, there appears to be no direct impact on funding, institutional allocations, or staking flows from either event, indicating that institutional participation or TVL (Total Value Locked) metrics were not obviously disrupted as part of these activities.

No Direct Exchange or Regulatory Commentary

Interestingly, the February market drop has not been explicitly discussed by prominent figures in the crypto world, such as industry founders or CEOs, with no substantial insights coming from exchanges or regulatory bodies like the SEC or the European Securities and Markets Authority (ESMA).

While the White House released a digital assets report under Executive Order EO14178, it does not specifically address the crash's details. The report can be viewed here.

Analysis of Previous Trends and Leverage Risks

The events of 2025 highlight ongoing leverage risks within the cryptocurrency market, a trend observed in prior deleveraging cycles, particularly between 2022 and 2023. As markets continue to navigate high leverage situations, these risks underscore the importance of analyzing derivatives exposure and macroeconomic announcements.

Past deleveraging experiences showed comparable effects on open interest, although 2025’s downturn was particularly shaped by macroeconomic factors, such as President Trump’s policy announcements, significantly affecting the crypto landscape.