The Crypto Market was a huge hit on Friday, wiping out almost all profits earlier this week. Bitcoin, a hovering nearly $88,000, plunged to $83,800, a 3.8% drop in just 24 hours. Major Altcoins like Avalanche (Avax), Polygon (Pol), Near (Near), Uniswap (UNI) lose almost 10%. The market has dumped an astounding $115 billion worth of value according to market data.
Ethereum also fell by more than 6%, reaching its weakest price against Bitcoin since May 2020. Unlike Bitcoin ETFs, which saw more than $1 billion inflows in the last two weeks, Ethereum ETFs have not attracted new investments since early March. This lack of interest adds to concerns about the performance of ETH compared to BTC.
How do US equities and economic issues affect cryptocurrencies?
The recession was not limited to digital assets. The US stock market also fell sharply after the release of weak economic data. The S&P 500 dropped by 2%, while the Nasdaq fell by 2.8%. Crypto stocks suffered even more, with Bitcoin’s biggest corporate holder, MicroStrategy (MSTR), losing 10% and Coinbase (Coin) down 7.7%.
The February inflation report showed a price index rise of 2.5% year-on-year, with a core inflation rate of 2.8%, slightly surpassing expectations. Consumer spending only increased by 0.4%, with adjusted figures indicating weak economic growth. The Federal Reserve GDPNOW model predicts that the US economy will be able to shrink by 2.8% in the first quarter, causing stag horror. Additionally, new US tariffs set to take effect on April 2 have been added to investors’ concerns.
Was this expected price crash for Bitcoin?
Bitcoin’s $84,000 drop was expected due to the CME futures gap earlier this week. Historically, BTC has tended to revisit these gaps, and this pullback is likely. However, as Bitcoin continues closely with the Nasdaq movement, a continuing recession in US stocks could lead to further losses in the crypto.
However, Santiment has faced sharp declines due to tariffs and inflation concerns, while global stock markets, including the S&P 500, have managed a meagre weekly profit and hovered around 84.3k. The mild BTC rebound after the stock market suggested increased independence from crypto stocks is in contrast to the strong correlation in the 2022 bare market.
Despite the ongoing revisions, some experts are seeing long-term positivity. LMAX Group strategist Joel Kruger noted that Crypto adoption is growing and major financial institutions are expanding their involvement. There could be more short-term dips, but he has strong support for the $70,000 to $75,000 range, and we expect a potential recovery to be possible later this year.
About the drawbacks…
Crypto analyst Michaël Vande Poppe warns that Bitcoin is losing momentum, with key liquidity levels at risk of under $84,000. If BTC defeats this support, there could be a further decline. He suggests another week of drop may be approaching before a possible second quarter rebound.
Weak US economic data, increased inflation and new tariffs have caused wider sales in both crypto and stock markets.
