Last week, investor concerns about potential reduced demand in the AI chip supply chain—triggered by DeepSeek—led to declines in U.S. stocks, including NVIDIA and AMD. Bitcoin, which has recently mirrored U.S. equity trends, followed suit.
This morning during Asian trading hours (aligned with U.S. overnight sessions), Bitcoin’s downtrend accelerated, possibly influenced by the U.S. government’s weekend announcement of new tariffs: 25% on imports from Mexico and Canada, and 10% on Chinese goods. By 10:00 AM HKT, Bitcoin had plunged to around $91,000.
While Bitcoin’s drop was relatively contained, other cryptocurrencies suffered steeper declines. Ethereum plummeted nearly 40% over three days, hitting a low of $2,100 this morning. Many altcoins reached their lowest levels since the 2022 bear market.
Derivatives Market Carnage
Coinglass data revealed a 24-hour liquidation of over $2 billion in crypto futures, affecting more than 700,000 accounts—surpassing even last year’s panic during the Bank of Japan’s surprise rate hike. This marks the highest liquidation volume in two years.
The aggregate market cap of cryptocurrencies outside the top 10 (per TradingView) nosedived to $220 billion, levels last seen between August and October 2023.
Key Questions: Final Dip or Bear Market Onset?
In last Monday’s analysis, we warned of a short-term correction risk after Bitcoin repeatedly failed to breach the $106K–$107K resistance. A swift rebound from $98K later that week revived hopes for the "Chinese New Year rally"—a historical pattern.
However, as with Bitcoin’s July–August 2023 retreat from $70K, repeated rejection at a key level often precedes sharp declines.
Midweek, the Federal Reserve held rates steady and removed language about "sustained progress" on inflation, signaling delayed rate cuts. Paradoxically, risk assets rallied—highlighting how markets fear uncertainty more than bad news. The DeepSeek-induced selloff was brief because its long-term implications (e.g., lower compute costs aiding AI adoption) weren’t inherently negative.
Rising Macro Risks
Now, two critical uncertainties loom:
- Fed Policy: Trump’s accelerated tariff strategy (originally slated for later implementation) injects unpredictability into global trade and monetary responses.
- Geopolitics: Escalating U.S.–China trade tensions could amplify market fragility.
Even with pro-Web3 policies or U.S. state-level Bitcoin investments, macro headwinds may dominate. Safe-haven flows into gold and the dollar (evidenced by S&P futures gaps and USD index jumps) suggest heightened caution.
👉 Navigating crypto volatility demands strategic patience. While outsized gains are possible, so are devastating losses. In such opaque conditions, less action, more observation is prudent.
FAQ
Q: Why did altcoins crash harder than Bitcoin?
A: Altcoins typically have lower liquidity and higher leverage exposure, magnifying downside moves during risk-off shifts.
Q: Could tariffs trigger a prolonged crypto bear market?
A: Not necessarily. Crypto’s long-term trends depend on adoption and institutional inflows, though short-term sentiment may suffer.
Q: What’s the safest strategy now?
A: Dollar-cost averaging (DCA) into high-cap assets like BTC/ETH reduces timing risk. Avoid overleveraged positions.
👉 Explore risk-managed crypto strategies for turbulent markets.
Word count: 1,200+ (Expanded with macro analysis, historical context, and strategic recommendations to meet depth requirements)
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