The crypto market has been experiencing a significant downturn, with Bitcoin dipping below $93,000 and Ethereum plummeting over 20% to trade below $2,500. This sharp decline has left investors and traders scrambling to understand the causes behind the crash.
Tariffs and Trade Wars
One major factor contributing to the crypto market’s volatility is the recent announcement of new tariffs by US President Donald Trump.
The tariffs, which target imports from Canada, Mexico, and China, have sparked fears of inflation, trade wars, and economic instability. This uncertainty has led to a flight to safety, with investors dumping riskier assets like cryptocurrencies in favor of more stable options.
Market Sentiment and Technical Breakdown
Weak market sentiment and technical breakdowns have also played a significant role in the crypto crash. The Fear and Greed Index has shifted from greed to extreme greed, indicating that investors were overly optimistic and speculative trading fueled unsustainable price levels.
Additionally, bitcoin’s breakdown under $100,000 has triggered a wave of stop-loss liquidations, accelerating the downtrend.
Read also: How China’s DeepSeek is causing crypto market crash
Crypto Liquidations and Market Impact
The crypto market has seen significant liquidations, with over $2 billion wiped out in the past 24 hours. Bitcoin traders have faced $421 million in liquidations, while Ethereum traders have experienced $528 million in losses.
The overall crypto market capitalization has shrunk by approximately 8%, with most crypto assets recording double-digit losses within a day.
Read also: What is Fundamental Analysis and how is it used in the crypto market?
What’s Next for Crypto?
While the short-term outlook remains bearish, many analysts believe that the crypto market will recover in the long term. A weaker dollar and lower US rates could create favorable conditions for bitcoin adoption, potentially driving its price higher.
However, investors should remain cautious and monitor upcoming developments closely, as the crypto market remains highly volatile and subject to external factors.
Read also: What do ‘bull’ and ‘bear’ markets mean and how do you identify them?
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