The value of major cryptocurrencies including bitcoin are tumbling this morning, as anxiety over the US economy fuels volatility in the financial markets.
Bitcoin has dropped by roughly 8% in the last 24 hours to around $88,000, its lowest level since mid-November last year.
That means the world’s largest crypto coin has lost around 6% off its value since the start of 2025, having fallen back from record highs of $109,000 late last year.
Ether, the currency for the ethereum network, is also falling, down 10% in the last 24 hours.
The cryptocurrency world is reeling from the biggest digital theft in history, in which $1.5bn of ether was stolen from Dubai-based crypto platform Bybit.
Today’s selloff also comes amid rising volatility in the markets; shares on Wall Street fell on Friday and Monday, on concerns that the US economy may be slowing.
Kathleen Brooks, research director at XTB, says high volatility is weighing on crypto:
Bitcoin is sharply lower and is below $90,000, which is a sign that the current environment of rising volatility is not conducive to cryptocurrency gains.
The gold price, which has risen to fresh record highs in recent days, slipped early on Tuesday, however, it is clawing back earlier losses now that Europe has opened. The low for the day is $2929, but if risk sentiment continues to falter, we expect the gold price to continue to recover in the short term.
After DonaldTrump won the US election last November there was speculation that the US would take a more pro-crypto approach, and possibly create a bitcoin strategic reserve.
Naeem Aslam, chief investment officer at Zaye Capital Markets, says:
Since President Donald Trump’s inauguration in January 2025, Bitcoin has experienced a notable decline, dropping over 13% from $106,000 to $92,000.
Trump was supposed to be a good luck for crypto but now it appears that things are totally opposite.
We do also think that this downturn is attributed to geopolitical concerns, economic uncertainties, and unpredictable policy shifts under the new. administration. Additionally, a significant security breach involving the Bybit crypto exchange, resulting in a $1.5 billion theft primarily in Ethereum, has further dampened market sentiment.
Key events
Khem Rogaly, senior researcher at Common Wealth, the think tank, argues that is no need for the UK to increase military spending.
The US pivot on Ukraine has created an opening to collaborate on European security and build a defence architecture independent from the US. More spending is not needed if Britain reallocates resources currently devoted to supporting the US in the projection of power worldwide.
For any serious debate to be had, we urgently need to recognise that that the military budget is already larger in real terms than in 1980 – during the height of the Cold War.
The British armed forces are presently deployed in the Middle East, Indo-Pacific and Europe. Rather than rethinking these commitments, ramping up spending further has been taken as given. This is is a strategy for BAE Systems’ shareholders, not genuine security. Real resilience will come from prioritising our economy and society, investing in public services and domestic industries and learning to manage external supply shocks.
BP to redevelop Kirkuk oil and gas fields
Jillian Ambrose
BP is preparing for a showdown with activist hedge fund Elliott Investment Management by going back to its roots.
Ahead of a keenly anticipated investor day on Wednesday, Iraq’s state news agency said the oil major, once known as the Anglo-Persian Oil Company, had signed a deal to redevelop four of the gulf state’s Kirkuk oil and gas fields over 100 years after it first began drilling for oil in the region.
The deal has emerged as BP’s board prepares to present a “fundamental reset” of the company’s struggling strategy to defend the company against Elliot which has recently amassed a stake worth almost £3.8bn, or 5% of its shares.
Elliott Management is widely expected to use its grip on the 120-year-old company to demand sweeping changes, including a potential break-up of the company, after BP lost almost a quarter of its market value in the past two years.
Under the terms of the deal BP is expected to spend up to $25bn over the lifetime of the project, a senior Iraqi oil official told Reuters in early February.
The signing came after the two parties agreed on “technical issues and contractual terms, including the economic model of the project,” according to a statement published by the state news agency.
The deal also marks a breakthrough for Iraq, where output has been held back by years of war, corruption and sectarian tensions.
Closing post
Time to wrap up….
Bitcoin has hit its lowest level since last November, as the crypto surge following Donald Trump’s election last year loses momentum.
Bitcoin is down over 6% today at around $88,000, while ether has slumped 10%.
Analysts blamed volatility in the markets, as well as a blow to crypto investor confidence from last week’s $1.5bn hack of ether from the Bybit exchange.
Sales of new Tesla cars almost halved in Europe last month, indicating waning demand for the US carmaker’s vehicles as its chief executive Elon Musk intervened repeatedly in the politics on both sides of the Atlantic.
The Texas-based carmaker sold 9,945 vehicles in Europe in January, down 45% from last year’s 18,161, according to data from the European Automobile Manufacturers’ Association (ACEA). Tesla’s share of the market dropped to 1% from 1.8%.
Shares in UK defence companies have jumped after Sir Keir Starmer announced plans to increase defence spending to at least 2.5% of GDP by 2027.
BAESystems, which makes armoured vehicles, warships, attack submarines, missile launchers, artillery systems and munitions, are up 4.2%.
Babcock, which supplies engineering support to naval, land, air and nuclear operations, are up 1.5%.
The average energy bill for households in Great Britain will rise by £111 from April to £1,849 a year for a typical household, after the energy regulator announced the third consecutive increase in the cap on gas and electricity charges.
The slide in Bitcoin is hurting MicroStrategy, the software company which turned itself into the world’s first “bitcoin treasury company”.
Shares in MicroStrategy, which has issued billions of dollars of debt to buy bitcoin, are down 8.5% in early trading….
Tesla shares drop after European sales plunge
Over on Wall Street, shares in Tesla have dropped 1.5% at the start of trading.
TomBailey, head of research at HANetf, cautions that Keir Starmer’s pledge to achieve 2.5% of GDP defence spending by 2027 is unlikely to be enough to fortify Europe.
Bailey explains:
The Trump administration has demanded 5%, while Mark Rutte, the current head of NATO, has said spending will have to go much higher than 3%.
“The figure also remains well below Cold War era spending (as a share of GDP). In 1989, the UK spent 4.2% of its GDP on defence, while in the early 1970s it spent an average of 5.1%. This, we should remember, was a time when the U.S. commitment to European security was rock solid. In our current era of heightened geopolitical instability, combined with the potential of U.S. disengagement, the UK and other European NATO members will have to be much more ambitious.
“The current increase in defence spending will continue to benefit UK defence stocks, Bailey predicts, adding:
The news saw a lift to BAE Systems’ share price, now up over 4% today at time of writing. Babcock and QinetiQ also saw gains on the back of the news.
Over in the US, house price growth has picked up a little.
Prices rose by 3.9% in the year to December, according to the S&P CoreLogic Case-Shiller U.S. National Home Price index, up from a 3.7% annual gain in November.
A narrower survey of 20 large US cities showed that house price inflation rose to 4.5%, up from 4.3%.
New York again reported the highest annual gain among the 20 cities with a 7.2% increase in December, followed by Chicago and Boston with annual increases of 6.6% and 6.3%, respectively. Tampa posted the lowest return, falling 1.1%.
Cutting foreign aid (to fund higher defence spending) will weakens the UK in an unstable world, warns the IPPR think tank.
Harry Quilter-Pinner, executive director at IPPR, explains:
“The government is right to act decisively to increase defence spending – the world has changed radically even in the last week. Some on the left will find this difficult to accept, but there is nothing progressive about leaving the UK or Europe under-defended. Any government’s first duty is to keep its citizens safe and secure.
“But to navigate this era of global insecurity the UK will need new partnerships and alliances, and cutting the aid budget will undercut our ability to build them. When the UK helps countries to adjust to climate change, to grow and to prosper, we build our relationships and our influence. When countries like the UK withdraw, China and Russia stand ready to step in. The US is making a strategic mistake in dismantling USAID: the UK should not fall into the same trap.
“With defence spending set to rise beyond 2.5 per cent, and other pressures on public services growing, further spending cuts will not be a viable strategy in the future. The world has changed since Labour took office. Going forward, the government should re-consider whether its commitments on spending and tax are fit for the future.”
Here’s City analyst KathleenBrooks, research director at XTB, on the defence stock rally:
News that the uk will boost its defence spending to 2.5% if gdp by 2027 and to 3% of gdp in the next decade is having an impact on markets. BAE systems is one of the top performers on the FTSE 100 and airbus and safran are top performers in Europe. @XTBUK
Defence is now a massive theme for European stocks in 2025. Germany is also planning to make a special defence fund of €200bn, there is a huge amount of investment involved.
Ben Zaranko, associate director at the Institute for Fiscal Studies, says Keir Starmer is right to resist funding higher defence spending through higher borrowing:
“If the UK needs to spend more on defence on a structural and permanent basis, that is not something that can be sustainably borrowed for. The Prime Minister has recognised this, and has signalled that higher defence spending will be offset, at least in the short term, by lower spending on overseas aid. If defence spending needs to go higher than 2.5% of GDP, cuts to aid won’t be enough.
Getting towards 3% of GDP will eventually mean more tough choices and sacrifices elsewhere – whether higher taxes, or cuts to other bits of government. The world has changed, and one question is whether the government’s pre-existing promises on tax and spend might need to change as well.
Zaranko adds:
As a minor note to what is a major announcement, the Prime Minister followed in the steps of the last government by announcing a misleadingly large figure for the “extra” defence spending this announcement entails. An extra 0.2% of GDP is around £6 billion, and this is the size of the cut to the aid budget. Yet he trumpeted a £13 billion increase in defence spending.
It’s hard to be certain without more detail from the Treasury, but this figure only seems to make sense if one thinks the defence budget would otherwise have been frozen in cash terms. This is of course dwarfed by the significance of today’s announcement but is frustrating none the less.”
Crypto markets are “anything but quiet”, says David Morrison, senior market analyst at Trade Nation, following the drop in bitcoin to around $88,000 today.
Morrison says:
Yesterday Bitcoin slumped below intermediate support around $95,000, and this morning it sliced through longer-term support at $91,000. Bitcoin has lost around 10% since the end of last week and is trading at its lowest level in over three months.
Ether is down 16% since Sunday’s close, and other cryptos are also getting hit. The move looks like a broad ‘risk off’ trade, triggered by last week’s $1.5 billion hack of the Bybit exchange.
Keir Starmer’s defence spending pledge has not hurt UK government bonds.
Gilt prices are a little higher today, pulling down the yield (or interest rate) on short and long-term UK debt slightly.
That’s because Starmer was clear to MPs that the money to hit the 2.5% of GDP target will come from the overseas development budget, not from increased borrowing.
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