Key Factors Behind Recent Cryptocurrency Market Decline
The cryptocurrency market faced a severe decline on February 3, with Bitcoin plunging to $95,300 and Ethereum to $2,556, resulting from tariff impositions by President Trump. These tariffs triggered nearly $2 billion in liquidations, indicating a sell-off due to weakening investor sentiment. Experts highlight the uncertainty created by these trade policies as a key factor in the market’s downward trend.
On February 3, the cryptocurrency market experienced a significant downturn, with Bitcoin dropping to a three-week low of $95,300, and Ethereum falling to nearly a two-month low at $2,556. This decline resulted primarily from tariff impositions by U.S. President Donald Trump on countries like Mexico, Canada, and China, which sparked a broader trade conflict and led to almost $2 billion in liquidations within the crypto market. As investors reacted to these developments, Bitcoin’s 4.4 percent decrease and Ethereum’s staggering 17.8 percent drop reflected a deepening investor pessimism.
Experts attribute the weak performance of the crypto market to the recent tariffs imposed by President Trump. These levies have created a ripple effect across financial markets, leading to substantial selling activity. Avinash Shekhar, co-founder and CEO of Pi42, emphasized the precarious state of the crypto market, indicating that Bitcoin’s fall below $100,000 reveals ongoing challenges as its support levels remain critical in determining market trends.
Shekhar highlighted that the ongoing trade tensions are dampening confidence among investors, resulting in widespread sell-offs throughout the crypto landscape. CoinSwitch Markets Desk corroborated these observations, noting that the magnitude of liquidations experienced was unprecedented, occurring shortly after Trump’s tariff announcements on key trading partners.
The tariffs include a 25 percent levy on goods from Canada and Mexico and a 10 percent tariff on those from China, with Trump indicating plans to extend these tariffs to the European Union as well. This aggressive protectionist approach threatens to destabilize markets and triggers heightened caution among investors.
Looking forward, Shekhar noted that the fortune of cryptocurrencies will largely hinge on macroeconomic conditions and investor confidence. Although there exists potential for Bitcoin to reclaim momentum with a rise above the $100,000 mark, a cautious outlook remains warranted. He also mentioned that India is reevaluating its position on cryptocurrencies in light of evolving global perspectives on digital assets.
According to CoinSwitch Markets Desk, Bitcoin appears to have a robust support level around $90,000, which makes further declines unlikely in the face of current investor sentiment trends. The dominance of Bitcoin in the market has notably increased to 61 percent, indicating a risk-averse attitude among investors.
The cryptocurrency market is highly influenced by economic, political, and macroeconomic factors. The recent imposition of tariffs by U.S. President Donald Trump has created uncertainty that resonates throughout the financial landscape. Such protective measures can lead to increased volatility and investor anxiety, significantly impacting prices and trading dynamics within the crypto sector. Understanding these external influences is essential in interpreting cryptocurrency market movements and trends.
In summary, the recent downturn in the cryptocurrency market is primarily due to U.S. President Trump’s new tariffs on major trading partners, which have led to substantial liquidations and reduced investor confidence. As Bitcoin and Ethereum both struggle to maintain their price levels, market participants are advised to adopt a cautious approach. The future of cryptocurrencies will likely depend on broader macroeconomic conditions and shifts in investor sentiment.
Original Source: www.news18.com
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