On March 4, both the cryptocurrency market and the stock market faced downward pressure. According to QCP Asia analysis, although Trump’s announcement on Truth Social triggered a brief rebound in the crypto market, this optimism was quickly replaced by risk aversion.
Analysts believe that the reasons for the intensified market sell-off include Trump's re-mentioning of tariff policies on Canada, Mexico and China, which has caused investors to worry about escalating trade tensions and thus take financial risk-averse actions.
In addition, the inclusion of XRP, SOL and ADA in the reserve has also caused disagreements. The market has gradually been replaced by deeper doubts from the initial optimism. The market is concerned about the opacity of the source of funds for the reserve and the potential contradiction with DOGE's cost-cutting measures.
Despite the SEC's suspension and revocation of enforcement actions against crypto companies, the market's risk aversion remains strong. Volatility has returned to the global market, with the 10-year U.S. Treasury yield falling 50 basis points in two weeks, the VIX index breaking through 22, and the volatility of short-term Bitcoin options rising 8 percentage points since the weekend. Market sentiment is clearly tilted towards put options.
BTC and Nasdaq technical indicators reveal a bleak market outlook
Meanwhile, the technical outlook for both Bitcoin (BTC) and the Nasdaq has deteriorated simultaneously. On Monday, the Nasdaq triggered a bearish reversal of a “double top” pattern, further adding to the short-term downside pressure on Bitcoin.
Bitcoin prices fell more than 10% in the past 24 hours, giving up earlier gains and retreating from $96,500 on Sunday to a low of $82,472 on Monday, testing the key 200-day simple moving average (SMA) support level. The 200-day SMA is considered an important indicator of the long-term trend, and a break below this level could foreshadow a larger decline.
The Nasdaq's "double top" pattern, which consists of two highs and a trough, is usually formed after a sustained uptrend, indicating that prices may fall further. The Nasdaq has formed two highs near $22,200 and a trough at $20,538 since mid-December. On Monday, the Nasdaq also broke below the trough support, confirming this "double top" bearish pattern.
According to technical analysis theory, the decline of the double top pattern may be at least 70% of the distance between the high and the trough. At the same time, according to historical data, the failure rate of this pattern is only 11%, and in most cases it will lead to a deeper decline.
Bitcoin and Nasdaq both lost momentum in December and are now trading close to their respective 200-day moving averages. If Bitcoin falls below the key support of $82,000, the next key support will be the previous all-time high of $73,700.
In summary, Trump's tariff policy and the controversy over cryptocurrency reserves have triggered risk aversion in the market. At the same time, the technical outlook of Bitcoin and the Nasdaq index is also facing downward pressure. Investors need to remain vigilant and pay close attention to market dynamics.
Conclusion:
Under the dual influence of macro risk aversion and technical breakdown, the cryptocurrency market may continue to experience a period of high volatility. At the same time, retail investors need to be especially vigilant about the risks brought by leveraged trading to avoid suffering heavy losses due to drastic market fluctuations.
For long-term holders, they can pay close attention to the capital flow and game situation near the key support level, and wait for the market sentiment to gradually stabilize and warm up. Remember, no matter how the market changes, staying calm and rational is always the unchanging principle in investment.
What do you think of the current market dynamics? How do you think investors should respond to these challenges? Leave a comment in the comments section to discuss!