Bitcoin and the broader crypto market are under significant pressure as macroeconomic concerns fuel investor anxiety.
In the past 24 hours, the price of BTC has fallen 2.2%, briefly touching $76,624 before recovering to $81,376 as of press time.
Ethereum (ETH), the second largest crypto asset by market cap, also dropped 10% to $1,760, its lowest level since November 2023. At the time of writing, ETH has slightly recovered to above $1900.
Other major assets, including Solana (SOL), XRP, Cardano (ADA), Dogecoin (DOGE), and Binance Coin (BNB), recorded significant losses of more than 4% each during the reporting period.
Data from Coinglass showed that the sell-off triggered a surge in liquidations, with 321,000 traders losing a combined $906 million.
According to the data, traders with long positions betting on further price increases suffered the most, with $732.2 million wiped out, while short positions accounted for $173 million.
Why did the market crash?
Macroeconomic uncertainty appears to be the primary driver of the market downturn, which has had a far-reaching impact.
Bitcoin analyst Fred Krueger attributed the plunge to fears of an economic downturn, saying:
“The reason Bitcoin is going down is simple: fear of recession.”
Over the weekend, US President Donald Trump did not dismiss the possibility of a recession, sparking fresh concerns across financial markets.
Analysts at The Kobeissi Letter highlighted Trump’s statement’s ripple effect, noting that technology stocks have suffered steep losses. The Nasdaq 100 has fallen 12.4% in 13 trading sessions, approaching bear market territory at its fastest pace since the March 2020 crash.
The analysts continued that cryptocurrencies have not been spared. Since peaking on Dec. 17, the market has shed $1.3 trillion, with a 35% drop in the last three months signaling a deepening correction.
However, with no clear catalyst to drive a reversal, the market remains vulnerable to further declines.
Arthur Hayes, BitMEX co-founder, suggested that Bitcoin could find a bottom around $70,000, marking a 36% decline from its $110,000 peak. However, he noted that such corrections are common in bull markets.
Nevertheless, he pointed out that:
“Traders will try to buy the dip, if you are more risk averse wait for the central banks to ease then deploy more capital. You might not catch the bottom but you also won’t have to mentally suffer through a long period of sideways and potential unrealised losses.”
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