Crypto Market Crash: Trade War Fears?
The global cryptocurrency market experienced a significant downturn in the past 24 hours, following last Monday's crash triggered by DeepSeek AI and the Bank of Japan's rate hike. Bitcoin and Ethereum prices dropped 6% and 8% respectively over the week.
Trump Tariffs and Market Impact
President Trump's decision to impose tariffs on Canada, Mexico, and China exacerbated the situation, impacting both stock and crypto markets. The global crypto market cap plummeted by over 3%, from $3.49 trillion to $3.35 trillion—a loss of more than $140 billion in under 24 hours. The Crypto Fear & Greed Index fell to 47 (Neutral), reflecting growing investor negativity.
The tariffs, justified under the 1977 International Emergency Economic Powers Act (IEEPA), imposed a 25% tariff on imports from Mexico and Canada and a 10% tariff on imports from China. This sparked concerns about a trade war and rising prices for US consumers, further fueled by Friday's US PCE inflation data showing a third consecutive month of increased inflation.
Economists warn that these blanket tariffs could negatively impact the US economy, increase inflation, and lead to job losses. Retaliatory tariffs from affected countries are already underway, escalating the trade conflict.
Significant Crypto Liquidations
Over $700 million in crypto liquidations were reported by Coinglass, affecting over 250,000 traders in the last 24 hours. Binance saw the largest single liquidation order: $11.84 million in ETHUSDT. This follows the previous Monday's crash, which saw a $98.46 million BTCUSDT liquidation on HTX.
Long positions suffered the most, with nearly $520 million liquidated compared to $80 million in short positions. Bitcoin, Ethereum, Solana, Dogecoin, XRP, and other assets experienced significant price drops.
Expert Predictions and Market Outlook
Crypto trader Skew anticipates "short-term mayhem" due to uncertainty regarding the final tariff percentages. Hedge funds are reportedly betting against the stock market, and Goldman Sachs data reveals a significant increase in short positions on US stocks.
Bitcoin fell to a 24-hour low of $99,022, and Ethereum dropped more than 5% to $3,069. Other top altcoins also experienced declines of over 5%.
The strengthening US dollar index (DXY), currently at 108.50, and the rising 10-year Treasury yield (above 4.54%) are adding to the bearish pressure. A significant selloff may occur if Bitcoin falls below the $95,000 level, with traders also cautious due to a double-top pattern.
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