February 2025 was marked by sharp volatility across global markets, with a series of macroeconomic and political events that weighed heavily on investor sentiment. From the recession in the United States to the collapse of cryptocurrencies, through the crisis in technology stocks and mounting geopolitical uncertainties, the following is a review of the principal financial events of the month.

US Recession and Monetary Policy Outlook

According to the Atlanta Fed, the US economy officially entered recession, with a negative growth projection of -1.5% for the first quarter of 2025. This represents a dramatic reversal from the +3.9% growth forecast issued just four weeks earlier. The news fuelled expectations of a rate cut by the Federal Reserve, with markets now pricing in nearly three reductions in the cost of borrowing before year-end.

Equity Market Performance

Equity markets endured a turbulent February. US indices recorded broad-based declines, with the Nasdaq falling on the back of weakness in technology stocks. The Dow Jones was the only major index to close in positive territory (+0.95%), whilst small-cap stocks bore the brunt of the sell-off. Shares linked to artificial intelligence and so-called “meme stocks” were hit hard, with large algorithmic investment funds (CTAs) swiftly reducing their exposure.
One of the most significant moves was the collapse of the “Magnificent 7” basket — the technology giants comprising Apple, Microsoft, NVIDIA, Amazon, Meta, Google and Tesla — which shed approximately $2.2 trillion in market capitalisation. For the first time in two years, these companies failed to comfortably beat revenue expectations during the earnings season.

Cryptocurrency Markets in Crisis

February proved a dismal month for cryptocurrencies. Bitcoin fell 27% from its all-time high of $109,000, with the Bitcoin/Gold ratio dropping to multi-month lows. Forced selling driven by the unwinding of “cash-and-carry” trades contributed to the market collapse. Cryptocurrency-linked ETFs also recorded substantial outflows, signalling a deterioration in investor confidence.

Bond Markets and Currencies

US Treasury yields plummeted in the final two weeks of the month, with the two-year yield falling below 4.00%. The yield curve inverted once again, flagging potential economic difficulties ahead. The dollar experienced a volatile February: after an initial strengthening driven by tariff tensions, it gave back ground in the second half of the month.

Commodities: Oil, Gold and ETFs

The oil price registered notable weakness, with WTI falling below $70 per barrel, before staging a partial recovery in the final days of the month on the back of renewed tensions in Ukraine. Gold, despite a bout of liquidation, held its monthly gains, with gold ETFs recording their largest weekly inflow since 2022.

Geopolitics and the Outlook Ahead

From a geopolitical standpoint, trade tensions between the United States and China remain elevated, with the Trump administration intending to raise tariffs to 18%, a level not seen since the Great Depression. In Europe, German elections pointed towards a likely coalition between CDU/CSU and SPD, whilst the proposed agreement on mineral resources between the United States and Ukraine collapsed, slowing the peace process sought by the Trump administration.
Another noteworthy development was the announcement by the Dubai Financial Services Authority, which officially recognised the USDC and EURC stablecoins, marking a significant opening of the digital asset market in the United Arab Emirates.

Conclusion

February 2025 was a month defined by uncertainty and sharp market swings. With a recession in the United States, the collapse of cryptocurrencies and mounting trade tensions, investors are watching closely for the Federal Reserve’s next moves and possible global policy interventions. The bond market is already pricing in multiple rate cuts, whilst equity markets search for a new equilibrium following the heavy sell-off. March may prove decisive in determining whether the global economy enters a more pronounced phase of slowdown, or whether markets stage a recovery.