The cryptocurrency market is experiencing a significant correction, erasing all gains made since the November presidential election. Total market capitalization has fallen 8% to $2.7 trillion, with Bitcoin plummeting 7% to $78,000—its lowest point since November. This selling pressure intensified following the announcement of new tariffs on Chinese imports, fueling concerns about a global economic slowdown.

According to The Kobeissi Letter, since trade war anxieties emerged on January 20th, the crypto market has lost $800 billion, negating gains despite the prior administration's pro-crypto stance. Bitcoin, once considered a safe haven asset like gold, now closely tracks riskier assets. Its correlation with the S&P 500 reached 0.88 in 2024, indicating it mirrored the stock market's movements nearly 88% of the time. Furthermore, liquidity concerns are prompting fears of a major market crash, as capital flows out of the cryptocurrency market.

Ethereum's Post-Election Gains Erased

Following Bitcoin's downturn, Ethereum has also suffered a significant decline, completely erasing its post-election rally and falling 9% since November 5th. The Kobeissi Letter highlighted this sharp drop, raising questions about the onset of a new bear market. ETH is now down almost 50% from its post-election highs, reflecting the broader market's decline. Prices are near $2,000, their lowest point since November, signifying a dramatic shift in market sentiment. [post_titles_links postid="425760"]

Altcoins Plummet Amid Economic Uncertainty

XRP and Dogecoin led the losses, plunging over 10% after the confirmation of new U.S. tariffs on China. Major altcoins such as Cardano (ADA) and Binance Coin (BNB) also fell by at least 9%, contributing to the prevailing bearish sentiment. Traders cite liquidity draining from memecoin rallies and Bitcoin ETF sell-offs as primary factors driving the downturn. One cryptocurrency user commented that the current market conditions are not conducive to an altcoin season, and a swift recovery is unlikely.

Despite strong earnings from Nvidia, overall market sentiment remains weak. The weakness in the S&P 500 and concerns over a protracted U.S.-China trade dispute have negatively impacted the cryptocurrency market, exacerbating the downturn. Analysts at SignalPlus observed a shift among Bitcoin traders, with more investors opting for bearish put options as sentiment deteriorates.

The Future of Crypto

Friday's losses mirrored a sharp decline in Chinese stocks following the announcement of a new 10% tariff on Chinese imports, further intensifying fears of a trade war between [article_inside_subscriber_shortcode title="Never Miss a Beat in the Crypto World!" description="Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more." category_name="News" category_id="6"]

FAQs

Why is Bitcoin down today?

Bitcoin's decline is attributed to escalating trade war fears, significant ETF outflows, and weakening liquidity, triggering panic selling among investors.

Is the cryptocurrency market entering a bear phase?

With Bitcoin, Ethereum, and altcoins experiencing sharp declines, analysts are concerned about a new bear market as liquidity dries up and investor sentiment turns cautious.

Why is Ethereum down today?

Ethereum's plunge is due to Bitcoin's decline, significant sell-offs, and waning investor confidence, completely erasing all post-election gains.