Bitcoin and ether sliding
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 Donald Trump 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
Tesla shares drop after European sales plunge
Over on Wall Street, shares in Tesla have dropped 1.5% at the start of trading.
Tom Bailey, 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 Kathleen Brooks, 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
— kathleen brooks (@KATHLEENBROOKS) February 25, 2025
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.
— kathleen brooks (@KATHLEENBROOKS) February 25, 2025
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.
Defence stocks lifted by higher spending plans
Shares in UK defence company BAE Systems have climbed, after Sir Keir Starmer told MPs that the UK government will lift defence spending to 2.5% of GDP by 2027.
BAE Systems are now up 4.2%, the top riser on the FTSE 100 index, as Starmer confirmed earlier rumours that he would boost spending, and also set a “clear ambition” to get defence spending to 3% in the next parliament.
Traders will be calculating that some of the £13.4bn of extra spending pledged each year from 2027 by Starmer (funded by cutting the aid budget) will be spent buying BAE products, which include armoured vehicles, warships, attack submarines, missile launchers, artillery systems and munitions.
So far this year, BAE’s shares have risen by over 17%, as pressure has mounted on European governments to spend more on defence.
Other European defence company stocks are also rallying today – Germany’s Thyssenkgrupp has jumped by over 11%, following reports that Germany’s chancellor-in-waiting Friedrich Merz has opened talks with the Social Democrats to quickly approve as much as €200bn in special defense spending.
Shares in defence company BAE Systems are rising, following the news that Sir Keir Starmer is to give a surprise statement to MPs at 12.30pm on “defence and security”.
My colleague Andrew Sparrow writes:
We have not been told what he will be announcing, but a ministerial statement by the prime minister is normally big news, and there is speculation that he might have something significant to say about defence spending ahead of his meeting with President Trump in the White House on Thursday.
The government has a theoretical commitment to raise defence spending to 2.5% of GDP, but it has not said when this will happen, or even if it will be before the next election. Until recently ministers have been saying that the decision will be announced when the strategic defence review is published in the spring.
But Starmer is going to want to arrive in Washington with some news that will impress Trump, and the one thing the US president gets most praise from in Europe is being right about the need for Nato countries to spend more on defence. Starmer may be addressing that today.
There’s a rumour that Starmer may slash the UK aid budget to fund higher spending on defence….
UK PM STARMER TO SLASH BRITAIN’S AID BUDGET TO IMMEDIATELY HIKE DEFENCE SPENDING TO 2.5 PER CENT OF GDP – THE SUN REPORTER
— *Walter Bloomberg (@DeItaone) February 25, 2025
BAE Systems are up 3.2% today, adding to their recent gains on expectations of higher European defence spending.
Joel Kruger, market strategist at LMAX Group, reckons two factors are responsible for the drop in crypto prices:
“The crypto market has gotten off to a tough start in 2025. We believe there are two material factors contributing to this.
The first comes down to what has already been priced in. Indeed, there has been plenty of optimism around a crypto-friendly US administration. At the same time, a lot of this optimism has already been reflected in the price action from November through January, leaving the market exposed to a sell-the-fact type reaction. Investors are now looking for more follow-through on the administration’s policies, which should act as a catalyst for the next wave of demand.
“The other drag comes from the world of traditional markets where risk appetite has cooled off in response to global trade tension and a more hawkish Fed outlook.
As far as this goes, we believe correlations between bitcoin and traditional risk assets can be misleading, with bitcoin easily capable of generating sizable demand as an attractive portfolio diversification asset given properties that align more with that of a store of value. Technically speaking, there is formidable support for bitcoin in the $70-$75k area, which should serve as an attractive higher low ahead of the next major upside extension and bullish continuation to a fresh record high beyond $110k.”
Over in parliament, the boss of South West Water’s owner Pennon has said she has “regret” for the pollution incidents caused by the utilities firm.
Chief executive Susan Davy told the Environment, Food and Rural Affairs Select Committee:
“I absolutely regret and do not condone those incidents and pollutions that we had.
“We do not want to harm the environment, that is not the activities that we undertake everyday.
“We have hundreds of treatment works and thousands of pumping stations and from time to time things do go wrong.”
She said there were 194 individual pollution incidents across the group between 2023 and 2024.
Pennon was fined £2.2 million in 2023 for illegal sewage spills spanning four years across Devon and Cornwall.
South West Water was also hit by a cryptosporidium outbreak in Brixham, Devon last year, which forced thousands of households and businesses to boil their tap water before drinking it.
Davy received a pay increase of £300,000, weeks later.
UK environment secretary Steve Reed is now being booed as he answers questions about inheritance tax at the National Farmers’ Union conference, Joanna adds:
Farmers are booing environment secretary Steve Reed as he answers questions about inheritance tax at NFU conference.
A farmer was applauded when asking Reed what he would say to elderly farmers who feel best tax planning to is die before tax changes come in in April 2026.— Joanna Partridge (@JoannaPartridge) February 25, 2025
A farmer tells Steve Reed that the issue of inheritance tax is “sucking all the air out of the room” when discussing the challenges faced by farmers
— Joanna Partridge (@JoannaPartridge) February 25, 2025
Farmers’ leader blasts ‘cruel’ inheritance tax changes
Joanna Partridge
Back in London, Tom Bradshaw, president of the National Farmers’ Union (NFU), has railed against what he called the government’s “cruel” changes to inheritance tax for agricultural properties in his opening address to the organisation’s annual conference.
Bradshaw also warned that a cashflow crisis is leading farmers to question whether they can keep going until the end of the year, my colleague Joanna Partridge reports.
The government’s inheritance tax changes, announced in October’s budget, are “morally wrong and economically flawed”, Bradshaw told delegates, as he vowed to keep trying to get the policy changed:
He said:
“We will not go away and we cannot go away, we will not give in until ministers do the right thing.”.
Bradshaw said he had received “hundreds” of letters from NFU members worried about the impact of the tax changes on elderly farmers who were expecting to pass down the family farm when they die.
He said:
“I think of the grandson who wrote to me about their 94-year-old grandfather.”
“This isn’t just money, this is blood, sweat and tears. The farm is their life’s work, but as they grow older, the farm has also become their pension, because that’s what they were told to do.
Tax changes are only part of the challenges facing the nation’s farmers, Bradshaw said, listing “bad policy, geopolitics and unprecedented weather” as other pressures, which had left some sectors of UK farming “in the worst cash flow crisis ever”.
He added:
“Many farmers genuinely worry about whether they will make it to the end of 2025.”
Bradshaw criticised chancellor Rachel Reeves for refusing to meet him to discuss the tax changes, joking that he might have a better chance of arranging to see her “in Davos” at the World Economic Forum.
Bradshaw’s speech was followed by environment secretary Steve Reed. Acknowledging the difficult reception he has received at other farming events, Bradshaw said it would have easiest for Reed not to attend.
Farmers silently held up a protest banner during Reed’s speech, asking “How high up your ‘pecking order’ is eating?”.
Demonstrating the strength of feeling among some farmers, several tractors parked outside the QEII conference centre in Westminster honked their horns during his speech.
Bitcoin and ether sliding
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 Donald Trump 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.
Ryanair predicts higher fares this summer
UK households face mor expensive airline tickets, as well as higher energy bills, this summer.
Budget airline Ryanair’s CEO predicted this morning that summer fares will rise by between 4% and 6%.
Michael O’Leary told a press conference in Warsaw:
“Fares will grow between 4% and 6% this year, so you’ll still be traveling at slightly cheaper prices than in the summer of 2023, but you’ll be a little bit up on 2024”.
O’Leary also predicted that Boeing will catch up on its delivery backlog in time for summer 2026.
Annd he suggested that Ryanair could have up to five million passengers in Ukraine within a year or two of the country’s skies being opened after a ceasefire is agreed.
Automotive analyst Matthias Schmidt said one factor behind Tesla’s sales decline in Germany could be that consumers were waiting for the upgraded Y model, scheduled for the first half of 2025, the Financial Times reports.
However, other experts have also blamed a backlash against Musk’s political involvement, they add.
