The cryptocurrency market’s brutal sell-off intensified on February 5, 2018, as Bitcoin plunged to an intraday low of $6,600 before partially recovering to the $7,000 level. The flagship cryptocurrency has now shed approximately 65% of its value since reaching its all-time high of roughly $19,500 in mid-December 2017. Yet beyond the usual suspects of regulatory crackdowns and banking restrictions, a growing cloud of suspicion surrounding Tether (USDT) is amplifying fears that the entire market rally may have been built on shaky foundations.
TL;DR
- Bitcoin touched $6,600 on February 5, representing a 65% decline from its December 2017 peak
- Tether concerns intensify as investors question whether USDT artificially inflated BTC prices during the bull run
- BTC market cap has fallen to approximately $117 billion, with $67 billion shed in the past week alone
- Major banks including Bank of America, J.P. Morgan, and Lloyds banned credit card crypto purchases
- China blocked cryptocurrency trading websites using the Great Firewall, adding to selling pressure
The Tether Question: Was the Bull Run Real?
At the center of growing market anxiety is Tether (USDT), the controversial stablecoin that purports to be backed 1:1 by US dollar reserves. For months, skeptics have alleged that the issuance of new Tether tokens — without verifiable proof of corresponding dollar reserves — may have been used to artificially inflate Bitcoin prices during the parabolic rally of late 2017. On February 5, with Bitcoin trading at $6,955 according to CoinMarketCap data, those concerns felt more urgent than ever.
The timing has raised eyebrows. Tether’s issuance accelerated dramatically during Bitcoin’s run from $10,000 to nearly $20,000 in December, and the subsequent halt in new Tether minting coincided almost perfectly with the market’s downturn. While no formal finding of wrongdoing has been established, the shadow of potential market manipulation continues to unnerve investors already reeling from massive losses.
A Bloodbath in Numbers
The statistics from February 5 paint a grim picture. Bitcoin’s total market capitalization stood at approximately $117 billion, down dramatically from over $330 billion at its December peak. Over the preceding seven days alone, Bitcoin investors shed roughly $67 billion in value. The 24-hour trading volume across major exchanges reached approximately $9.3 billion, reflecting a surge in panic selling as positions were liquidated across the board.
The sell-off was not limited to Bitcoin. Every single cryptocurrency in the top ten posted double-digit losses. Ethereum fell to $698, down nearly 17% in 24 hours, while XRP dropped to $0.69 and Bitcoin Cash plummeted to $887. Cardano, which had been one of the breakout stars of late 2017, saw its price collapse to $0.33.
Banks Pull the Plug
Adding fuel to the fire, a wave of major financial institutions announced restrictions on cryptocurrency purchases via credit cards. Bank of America, J.P. Morgan, Citigroup, Capital One, and Discover all confirmed they had either implemented or were planning bans on using their credit cards to buy digital assets. Across the Atlantic, Britain’s Lloyds Banking Group followed suit, dealing another blow to retail investor access.
The coordinated move by major banks represented a significant escalation in the friction between traditional finance and the cryptocurrency ecosystem. For many retail investors who had relied on credit cards to fund their crypto purchases during the bull run, the bans effectively removed a key source of buying pressure precisely when the market needed it most.
China’s Great Firewall Escalation
Regulatory pressure from China intensified further as authorities moved to block access to cryptocurrency trading platforms and ICO-related websites through the country’s Great Firewall. This was a significant escalation from the September 2017 exchange ban, which had forced domestic trading platforms to shut down but had not prevented Chinese users from accessing offshore exchanges. China also moved to censor cryptocurrency-related advertisements on domestic search engines and social media platforms.
Why This Matters
The events of February 5, 2018, represent a critical inflection point for the cryptocurrency market. The convergence of banking restrictions, regulatory crackdowns, and the Tether controversy created a perfect storm that erased three months of gains in a single day. For investors, the key question is whether the market can find a sustainable bottom, or whether the structural concerns around Tether and declining institutional access will push prices even lower. With technical indicators showing severe oversold conditions but fundamental headwinds intensifying, the crypto market entered a period of unprecedented uncertainty — one that would ultimately take nearly two years to fully resolve before the next bull cycle began.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.