The cryptocurrency market has experienced a significant downturn recently, with major assets like Bitcoin and Ethereum witnessing notable declines. Bitcoin (BTC) is currently trading at $108,856, down approximately 1.9% from the previous close, while Ethereum (ETH) stands at $2,558.09, reflecting a 3.5% decrease.
Several factors have contributed to this bearish trend:
1. Escalating Trade Tensions: The U.S. administration's confirmation of 25% tariffs on imports from Canada and Mexico, along with additional tariffs on Chinese goods, has intensified global trade tensions. These measures have led to fears of a potential trade war, prompting investors to shift away from riskier assets like cryptocurrencies.
2. Market Liquidations: The sudden market downturn triggered significant liquidations, particularly among leveraged positions. Data indicates that over $1.1 billion was liquidated in a single day, with long positions bearing the majority of the losses.
3. Declining Investor Sentiment: The Crypto Fear & Greed Index has plummeted to levels indicating "Extreme Fear," reflecting growing apprehension among investors. This sentiment shift has been exacerbated by recent geopolitical events and economic uncertainties.
4. Reduced Institutional Investment: Institutional investors have been pulling back from the crypto market, with digital asset investment products experiencing outflows for consecutive weeks. This trend suggests a cautious approach amid the current market volatility.
