The cryptocurrency market faced a significant downturn on Monday, with Bitcoin (BTC) momentarily dipping below the $65,000 mark. This dramatic plunge was attributed to a combination of shifts in U.S. trade policy, escalating geopolitical tensions, and the anticipation of upcoming economic data, which collectively erased weekend gains and plunged market sentiment into extreme fear, currently assessed at a somber 5 on the Crypto Fear and Greed Index.
Crypto market capitalization fell by approximately 3–5% within a single day, edging dangerously close to the $2.2 trillion mark. This decline aligns with broader market unease following new tariff measures introduced by U.S. President Donald Trump that unsettled traditional financial markets and dampened the appetite for riskier assets.
Trade Tensions and Macro Risks Drive Sell-Off
The turmoil escalated after the Supreme Court of the United States ruled against certain presidential tariff powers, leading Trump to unveil new global tariffs of up to 15%. These developments sparked concerns over potential slowdowns in global growth and persistent inflation.
Further complicating the situation, rising tensions between the United States and Iran pushed investors toward established safe-haven assets like gold, while cryptocurrencies, which have often been lauded as “digital gold,” manifested characteristics typical of high-risk assets amidst the current market stress.
Moreover, large-holder selling exerted additional pressure on prices, highlighted by increased activity transferring from whale wallets to exchanges, indicating possible liquidation efforts. Analysts warned that thin market liquidity coupled with weak conviction among buyers exacerbated price volatility.
Economic Data and Policy Decisions in Focus
In light of the recent upheaval, investors are closely monitoring key economic indicators that are poised to influence market dynamics. Upcoming reports on consumer confidence, jobless claims, and producer price inflation are expected to inform the Federal Reserve’s interest rate decisions. With inflation rates recently exceeding forecasts, hopes for imminent monetary easing have diminished.
Additionally, the central bank plans to inject roughly $14.6 billion into the financial markets, a move that some analysts believe could offer temporary respite for speculative assets, though it falls short of overarching stimulus measures.
Technology sector earnings, particularly those of Nvidia, are also drawing attention given their potential impact on market sentiment across both tech equities and the cryptocurrency landscape.
Liquidations Rise as Fear Dominates Sentiment
Recent market data reveals that over $460 million in leveraged positions have been liquidated during this decline, with long traders bearing the brunt of losses. Institutional flows have shown a significant weakening, as exchange-traded crypto funds have experienced notable outflows.
Supply pressures further intensified after Bitdeer, a mining firm, sold its entire weekly production. In the midst of the turmoil, industry voices, including that of Michael Saylor, have reiterated a long-term optimistic outlook despite the prevailing short-term headwinds.
Reflecting the current market sentiment, the Crypto Fear and Greed Index has plummeted into extreme fear territory. Analysts anticipate that until there is greater clarity in the macroeconomic landscape, volatility is likely to persist as traders balance policy risks against broader adoption trends.
