Crypto Market Decline: Analyzing Tariff Impact and Seller Dominance
The cryptocurrency market has experienced a notable dip, with its capitalization falling by 1.97% in the last 24 hours, reaching $3.05 trillion. Since January 14, it has dropped by 6.95%. Bitcoin (BTC) has slipped below the $94.5k threshold as of January 19, prompting widespread market sell-offs.
President Donald Trump's announcement regarding potential tariffs on Europe has added to market uncertainty, contributing to the decline in crypto values. The Kobeissi Letter reported that U.S. stock market futures also suffered losses, with the Nasdaq 100 index declining by 1.6% due to trade concerns. On January 19, $700.5 million worth of positions were liquidated, followed by $301.7 million the next day.
Institutional Demand vs. Seller Dominance
Bitcoin often reflects the overall market sentiment, with altcoins behaving like leveraged BTC contracts, amplifying Bitcoin's movements. Recently, altcoins have reacted more negatively than Bitcoin, leading to a slight increase in Bitcoin Dominance over the past six weeks. Although Bitcoin saw some spot ETF inflows, this hasn't ensured a sustained bullish trend.
Institutional demand remains robust, as evidenced by CoinGecko's Bitcoin Treasury data, which highlights significant Bitcoin acquisitions by Strategy (MSTR) and Metaplanet. AMBCrypto noted that Michael Saylor hinted at another purchase, having added 13,627 BTC to reserves on January 12. However, these additions alone are insufficient to trigger a long-term uptrend.
Crypto analyst Axel Adler Jr observed that sellers have regained control of derivatives markets after a period of bullish sentiment. The Taker Buy/Sell Ratio reveals a 90-day taker aggression Z-score of -1.81, indicating a seller-dominant market. A shift towards neutral levels in this metric could signal a decrease in sell orders, though further declines are possible in the near term.
Final Thoughts
- The crypto market's decline is primarily due to US-EU trade tensions, leading to risk-off sentiment.
- Bitcoin faces increased sell pressure, suggesting potential further losses.