Market Turmoil as Cryptocurrencies Take a Hit Following Tariff Announcement

The excitement from the Sunday rally was short-lived as President Donald Trump confirmed new tariffs, causing a significant decline in the value of leading cryptocurrencies on Monday.

Cryptocurrency	Gains +/-	Price (Recorded at 7:30 p.m. ET)
Bitcoin (BTC/USD)	-8.09%	$86,051.25
Ethereum (ETH/USD)	-13.48%	$2,147.29
Dogecoin (DOGE/USD)	-15.69%	$0.1991

What Happened: Bitcoin saw a sharp drop, reaching an intraday low of $85,081, just one day after peaking above $95,000 due to the announcement of a U.S. strategic cryptocurrency reserve.

Ethereum also plummeted over 13%, hitting a low of $2,097.08, wiping out gains made on Sunday, while Dogecoin suffered a significant downturn with a decrease exceeding 15%.

Overall, the cryptocurrency market faced a liquidation of approximately $804 million within 24 hours, including $86 million in long positions that were completely wiped out. However, over $1 billion in short positions were at risk of liquidation if Bitcoin bounced back to about $92,300.

Bitcoin's Open Interest saw a drastic drop of 9.88%. Interestingly, traders on Binance futures took the opportunity to buy the dip, with long positions increasing to 69% of total bets placed.

In response to the market shift, the Crypto Fear and Greed Index fell back into the "Extreme Fear" zone, raising concerns of further selling pressure.

Market Overview and Trends

The global cryptocurrency market capitalization fell by 9.27%, settling at $2.84 trillion over the past 24 hours.

This downturn wasn't limited to cryptocurrencies; stock markets also experienced a decline. The Dow Jones Industrial Average dropped 649.67 points, or 1.48%, closing at 43,191.24, while the S&P 500 fell by 1.76% to finish at 5,849.72. The tech-heavy Nasdaq Composite saw a 2.64% decrease, closing at 18,350.19.

The market reactions followed Trump's announcement regarding the enforcement of tariffs on major trading partners, which heightened investor anxiety.

Looking ahead, investors are keenly anticipating the February jobs data set to be released on Friday, an important indicator for assessing the strength of the U.S. economy.

Analyst Insights

CryptoQuant, a well-regarded analytics firm, observed that short-term holders of Bitcoin were facing mild losses, suggesting a possible trend toward accumulation as prices decline. They stated, "For Bitcoin to reach its all-time high (ATH) again, a strong bullish push is necessary, marked by breaking through the short-term holder cost basis range of $90,000–$91,000 and sustaining prices above this level to restore confidence among short-term investors."

Market analyst Ali Martinez identified $97,000 as the "most critical resistance barrier" for Bitcoin, where around 2.27 million investors currently hold more than 1.64 million BTC. He believes that overcoming this supply wall could pave the way for new all-time highs.

The situation continues to evolve, with market participants keenly observing forthcoming developments and data that may influence future price movements.

As the market adjusts to these challenges, the resilience of cryptocurrencies will be tested in the coming days.

Bitcoin, Ethereum, Dogecoin