Bitcoin Crash Explained, President Trump Reveals More on U.S. Crypto Reserve, BlackRock Adds Bitcoin ETF to Model Portfolio, ByBit Hack PSA
News Block #77 (03/03/2025)
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Bitcoin Rebounds After Bull Market Correction
After chopping around $100K for months, Bitcoin’s volatility finally came back in a big way this past week, and not in the direction holders were hoping for.
Bitcoin experienced one of its typical violent bull market corrections, dropping to under $80K before bouncing back up above $90K on Sunday.
There were many theories about what caused this recent price drop, from worries about the impact of Trump’s tariffs to rising inflation expectations to the Bybit hack that stole $1.5 billion worth of ether (more on that later). In reality, it was probably a combination of these factors that contributed to the sell-off.
It’s important to remember that Bitcoin is volatile, and corrections of this magnitude are common.
Last year, Galaxy Digital’s Alex Thorn highlighted that during the 2017 bull market, Bitcoin experienced 13 drawdowns of 12%+ (12 were 15%+, and 8 were 25%+).
Furthermore, during the bull market of 2021, Bitcoin experienced 13 drawdowns of 10% or more (7 of them were 15% or more).
This data shows how this price action shouldn’t really faze people who’ve been holding Bitcoin for a while now, but for newcomers, it was probably quite shocking. Multiple on-chain metrics indicate that a lot of the selling came from short-term holders who recently bought the top and who may not have fully understood what they owned.
Below is a chart from Checkmate that highlights how short-term holders have been capitulating and selling. An STH-SOPR value below one means that short-term holders are selling their bitcoin at a loss.
Seasoned Bitcoiners and institutional investors know that historically, these are the moments that end up being the best buying opportunities in hindsight.
Bitwise CEO Hunter Horsley recently went on CNBC and shared some great insights on who’s been buying this dip.
Ok, so Horsley sounds quite bullish, given his vantage point at Bitwise. His comments reminded me of a tweet from the X account MacroScope, who described the “institutional mentality:”
It sounds like these institutions have indeed come alive—well, at least BlackRock has. This past week, BlackRock made a big move by adding its Bitcoin ETF to one of its portfolio models for the first time.
Okay—this is a big deal because these portfolios are essentially pre-built investment strategies used by financial advisors and institutions to help clients allocate capital. Once Bitcoin is in the model, it creates passive demand, making it easier for finance pros to allocate client funds to Bitcoin without needing to think twice.
In other words, this isn’t just a one-time buy—it’s a structural shift that could lead to steady, long-term inflows into Bitcoin.
BlackRock has started off conservatively. Only one of its smaller model portfolios will now have a target allocation of 1 to 2% in IBIT. And while that may not sound like much today, keep in mind that BlackRock’s model portfolios collectively manage around $150 billion. It represents a big first step.
So, all in all, this price correction was really about bitcoins moving from weak-handed, inexperienced investors to convicted long-term holders and institutional investors who have been patiently waiting for these price levels to finally buy in.
In other words…same as it ever was.
President Trump Posts About U.S. Crypto Reserve
The institutional buying certainly helped Bitcoin’s price find a floor under $80K and bounce from there, but Bitcoin also received some help from President Trump himself. On Sunday, Trump shared a post on Truth Social about a U.S. Crypto Reserve, causing the entire cryptocurrency market to spike.
This shocked many because President Trump mentioned three centralized cryptocurrencies but failed to mention Bitcoin.
There were plenty of reactions to the post, but I liked what Anthony Pompliano said when he wrote:
Believe it or not, even Coinbase CEO Brian Armstrong shared similar thoughts. He said, “Just Bitcoin would probably be the best option — simplest, and clear story as successor to gold,..."If folks wanted more variety, you could do a market cap-weighted index of crypto assets to keep it unbiased. But probably option #1 is easiest."
And my reaction? I feel that including altcoins in the U.S. strategic reserve is a lot like squirting ketchup on a beautiful bowl of homemade spaghetti.
Why? Because Bitcoin has unique properties that allow it to preserve its value over the long term. It’s decentralized, scarce, secure, and doesn’t have an issuer. These are properties that other altcoins can’t compete with. As Pomp alluded to, altcoins are more like tech stocks than Bitcoin. They’re simply different.
The good news is that President Trump was quick to clarify his post. Not too long after, he posted again:
It’s nice to have confirmation that Bitcoin will be included, but, quite frankly, it’s just wasteful and illogical to include other altcoins that have very different value propositions and risk profiles. Failing to understand why Bitcoin is better than other digital assets for storing value comes with a real opportunity cost.
As digital assets trend to zero against Bitcoin due to its monetary properties, Bitcoin will only grow to become a greater and greater percentage of any reserve it’s in, regardless of what other digital assets are included at the start.
Countries that recognize this early and focus on Bitcoin will have a competitive advantage over those that don’t. This is why I believe advocacy is crucial in the U.S. if Americans want their country to remain competitive in a world shifting to Bitcoin.
Advocacy efforts are already well underway. Crypto Czar David Sacks posted that more information about the reserve will be revealed at the upcoming Crypto Summit, which the White House announced a few days ago.
On March 7th, President Trump will host key business leaders and investors in the cryptocurrency industry to discuss the future of cryptocurrency in the United States.
Hopefully, those in attendance will take the time to teach Trump about what makes Bitcoin so special because, as Michael Saylor tweeted, “Bitcoin is the foundation of the crypto economy.”
Bybit Hit by One of Crypto’s Largest Hacks in History
The last piece of news I’d like to discuss was the recent Bybit hack. On February 21st, crypto exchange Bybit announced that it had been hacked for a massive $1.4 billion in ether, making it one of the largest single crypto heists in history.
Later, on-chain analysis and the FBI both confirmed that the hack was attributed to North Korea’s Lazarus Group.
So, how did this hack happen exactly? Well, apparently, it was quite sophisticated.
Nick Neuman wrote a whole thread explaining how compromised Bybit computers likely enabled this theft. He said malware likely made Bybit's computer browsers display fake transactions, which ultimately allowed the hackers to take control of the wallets and steal the ether.
He said that using dedicated hardware devices, like a specific laptop, whenever you sign transactions is one way to protect yourself from an attack on this.
I highly recommend everyone read the whole thread to learn more about what happened at Bybit. Furthermore, I’ll be doing a webinar with the folks over at Casa, where we’ll go over best practices to ensure you know how to keep your Bitcoin safe from all types of potential threats. Make sure to sign up by visiting casa.io/natalie.
As the Bitcoin bull market continues, it’s going to become more and more important for you to start getting serious about your self-custody and security. That’s why Coin Stories teams up with partners like Casa, Efani, and the Bitcoin Way to give people more resources to learn about how to better protect themselves from hacks and scams that are only poised to accelerate from here.
Now is the time to bolster your security so you can sleep well at night knowing your bitcoin is safe for all the bull markets to come.
Until next week, keep stacking.
- Natalie
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NEW: Ron Paul Exposes Truth on Auditing the Fed, U.S. Gold Holdings & Mega-Wealthy Politicians
In this episode with Dr. Ron Paul, we discuss:
Government waste and fraud
How some elected officials are worth $50 million on a $200,000 salary
Does the U.S. have all the gold it claims to?
Auditing the Fed, Fort Knox and all government agencies
Bitcoin and cryptocurrency
The U.S. dollar's reserve currency status
Why Ron has optimism about the future
Make sure to listen to my latest Coin Stories episodes, including Larry Lepard, Eva Vlaardingerbroek, and Col. Douglas Macgregor.
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Links to Items Mentioned in this Issue:
Saylor’s Big Bet on Bitcoin Is Inspiring Copycat CEOs
Alex Thorn’s Tweet on Bitcoin Price Drawdowns
On-chain Metric Showing Short-term Holder Selling
Checkmate Highlights Short-term Holder Selling
Nick Neuman’s Tweet on Strategic Crypto Reserve
MacroScope’s Tweet on Institutional Mentality
BlackRock Adds Bitcoin ETF to Its Model Portfolio
BlackRock Adds Bitcoin ETF to Model Portfolio
President Trump’s Post on Crypto Strategic Reserve
Anthony Pompliano’s Tweet on Crypto Strategic Reserve
Brian Armstrong Prefers Bitcoin in Strategic Reserve
David Sacks’ Tweet on Crypto Strategic Reserve
White House Announces Crypto Summit on March 7
Nick Neuman’s Tweet Thread on Bybit Hack
North Korea’s Lazarus Group Attributed to Hack
Bybit Hit By One of the Largest Hacks in Crypto History
You and Sam do really good work I am very impressed
That was a great rundown - thanks Nat