The cryptomarkt is confronted with a huge sale and wipes away more than $ 400 billion in just 24 hours. Large cryptocurrencies such as Bitcoin, Ethereum, XRP and Dogecoin have all taken a hit, with a number of almost 20%. But what causes this sudden crash? Let’s dive into the main reasons behind the unrest.
Trump’s rate war arouses
One of the biggest reasons for the market drop is the recent trade war that is being fueled by former US President Donald Trump. Trump A national emergency situation in the context of the International Emergency Economic Powers Act (IEEPA), has imposed Trump imposed strict rate rules, 25% on Mexico and Canada and 10% on Chinese import.
The market reacted immediately, for fear of higher prices, rising inflation and economic instability. As a result, US stock indexes fell sharply and the crypto market dragged with them.
Bitcoin network activity slows down
Apart from external economic factors, Bitcoin’s network activity has fallen considerably. Data of Cryptuquant shows That the mempool is almost empty. This means that there are fewer transactions, which is unusual for Bitcoin.
Moreover, Bitcoin transaction costs have fallen to just 1 SAT/VB, which indicates a low demand for block space. This is the lowest level of activity that has been registered since March 2024.
Crypto sees $ 2.18 billion in liquidations
The market has also seen a wave of liquidations, with more than $ 2.18 billion Worth of crypto positions that are wiped out one day, which affects more than 715,000 traders.
Long traders suffered the most and lost $ 1.85 billion, while short traders lost around $ 334 million. The largest single liquidation took place on Binance, where a trader lost $ 25.64 million in a single exchange.
Stronger American dollars adds pressure
Another factor that weighs Bitcoin is the strengthening of the US dollar. The US Dollar Index (DXY) has risen to 108.50, while the 10-year-old Treasury return has risen above 4.54%.
Historically, Bitcoin moves in the opposite direction of the yield of the dollar and the treasury, which means that a stronger dollar often leads to lower BTC prices.
Bitcoin’s critical support level
Bitcoin is currently struggling to retain more than $ 93,000. If it falls under the psychological support level of $ 90,000, analysts warn that further falls can lead. In the meantime, the Crypto Fear & Greed Index has fallen to 38, shifted from neutral to fear.
However, if BTC succeeds in recovering and breaking above $ 95,000, it can regain its bullish momentum.
