The crypto market is facing a sharp decline, just a day after a major boost from President Trump’s announcement about a national crypto reserve. Despite the optimism sparked by the U.S. crypto reserve news, the market has dropped by over 10%, with major cryptocurrencies suffering significant losses.
Market Overview
Data reveals that the top six cryptocurrencies by market capitalization have all seen their values plummet over the past 24 hours, with losses ranging from 7% to as much as 20%.
The total market cap of cryptocurrencies has fallen by 10.4%, now sitting at $2.8 trillion. This comes after the market surged to $3.2 trillion just a day earlier, following Trump’s reaffirmation of his commitment to creating a national crypto reserve that would include major tokens. This sudden reversal has left traders and investors puzzled, wondering why the market is down despite yesterday’s rally.
Major Losses Across the Board
Bitcoin, which briefly rose above $93,000 on March 3, has fallen by nearly 10%, now trading around $83,180, a drop of almost $10,000 from its peak just 24 hours ago.
Cardano (ADA) experienced the steepest decline, crashing over 20% to $0.81. ADA had rallied as much as 75% just a day earlier after being included in Trump’s crypto reserve plans, reaching a high of $1.13.
Solana (SOL) also saw a significant dip of more than 16%, now priced at $135.97. Solana had surged 20% the previous day thanks to its mention in Trump’s announcement.
Ethereum (ETH) and XRP both suffered similar losses, each falling by around 13%. Ethereum had soared by 11% yesterday, while XRP surged 28%, even surpassing Tether (USDT) to briefly become the third-largest cryptocurrency by market cap.
Binance Coin (BNB) saw a more modest decline of 7.06%, trading at $564.30. BNB had previously been relatively stable during the last crypto market crash, but it too was caught in the broader market downturn.
The Crypto Market Loses $100 Billion
According to the Kobeissi Letter, the overall value of the crypto market has now dropped by $100 billion compared to its level just before Trump’s crypto reserve announcement.
Why the Crypto Market Is Down Today
Although Trump’s crypto reserve plans provided an initial boost to the market, the rally was short-lived, as several macroeconomic and technical factors have now reversed the momentum.
- Global Trade Tensions
President Trump’s announcement of new tariffs on goods from Canada, Mexico, and China has escalated global trade tensions. Instead of prompting investors to seek out “safe-haven” assets like cryptocurrency, the uncertainty surrounding these geopolitical developments has led to a risk-off sentiment. Investors are now more cautious and are avoiding assets like crypto, which are often considered volatile and high-risk, especially in times of economic uncertainty. - Technical Factors and Automated Sell-offs
Analysts point to key technical levels, such as a significant gap in CME futures contracts, which have triggered automated sell orders. These technical pressures have compounded the broader market sell-off, accelerating the decline in crypto prices. - Risk-Off Sentiment and Portfolio Rebalancing
The recent volatility in traditional markets has prompted institutional investors and corporate entities to rebalance their portfolios, reducing exposure to risky assets like crypto. As investors shift to safer assets in the face of global uncertainty, the crypto market continues to feel the effects.
In conclusion, while Trump’s announcement initially boosted the crypto market, broader macroeconomic factors, technical selling, and shifting investor sentiment have dampened the bullish momentum, leading to today’s significant market decline.
