Why is Crypto Crashing and Will It Recover Today After 3 Day Drop

Why Is Crypto Crashing: Trump Tariff on China and Mexico Shakes Market

The cryptocurrency market has experienced a sharp downturn over the past three days, leaving investors questioning why is crypto crashing and why is the crypto market down today. The global crypto market cap currently stands at $2.64T, marking a 6.15% decline in the last 24 hours. This widespread drop in prices has affected major cryptocurrencies, including Bitcoin and Ethereum, as well as the overall market sentiment.

Why is Crypto Crashing: Is Crypto Bull Run Over? 

1. Bitcoin Price Crashes Below $80K For the First Time in Past 4 Months

Bitcoin, the leading cryptocurrency, has fallen to $80,000 for the first time in four months. At the time of writing, Bitcoin is trading at $80,100.25, witnessing an intraday drop of 5.51% with a market cap of $1.59T. Over the past week, BTC has plunged by 18.08%.

Source: CoinMarketCap

Technical indicators also hint at further downside pressure. According to Ali Martinez, the Moving Average Convergence Divergence (MACD) on the weekly chart has shown a bearish crossover, which historically leads to an average 40% correction in Bitcoin’s price. 

If this pattern repeats, BTC could further decline towards $68,000, causing panic among investors and increasing concerns over why is crypto going down.

2. Trump Tariff on China and Mexico Leads to Market Uncertainty

Regulatory and policy changes have also contributed to the market slump. U.S. President Donald Trump announced a 10% tariff on Chinese goods and reaffirmed 25% tariffs on imports from Mexico and Canada, effective from March 4. These tariffs have sparked concerns over global trade relations and economic stability, impacting riskier assets like cryptocurrencies.

Additionally, Trump's pro-crypto stance appears to be rolling out slower than expected, leading to disappointment among investors. Memecoins and other politically-backed cryptocurrencies have suffered substantial losses, further escalating the market downturn.

3. Bitcoin and Ethereum ETF Records Outflows for a Week

Institutional investors have been withdrawing from crypto-based exchange-traded funds (ETFs), contributing to the market’s downward spiral.

• Bitcoin ETFs recorded a daily net outflow of -$275.83M, with total net assets valued at $94.30B.

• Ethereum ETFs also faced -$45.02M in daily net outflows, bringing total net assets to $8.35B.

This outflow from ETFs signals reduced institutional confidence, intensifying the crypto dropping trend and adding to fears about is crypto bull run over.

Fear and Greed Index Crypto: Market Sentiment in Extreme Fear

The crypto greed and fear index has shifted from 10 (Extreme Fear) to 16 (Extreme Fear) over the past 24 hours. This slight recovery still indicates that the market is in a highly fearful state. Just last week, the index was at 55 (Greed) and 72 (Extreme Greed) a month ago. 

Historically, extreme fear in the index has coincided with major market corrections. The uncertainty over regulatory actions, Bitcoin’s price movement, and ETF outflows have fueled panic selling, keeping the market in a vulnerable state.

What is Going on With Crypto Today and Will Crypto Recover?

According to CoinMarketCap, Bitcoin and other altcoins are hovering in a bearish zone now. Bitcoin is trading at $80,100.25, after an intraday drop of 5.51% whereas Ethereum price is standing at $2,133.44, after a drastic drop of 9%. Moreover, XRP price also crashed to $2.02, raising major concerns for the investors. While the market is experiencing crypto crashing, several factors indicate a potential recovery:

• MicroStrategy’s Massive Bitcoin Purchase: The company has acquired 20,356 BTC worth ~$1.99B at an average price of $97,514 per Bitcoin. This institutional accumulation suggests confidence in Bitcoin’s long-term value.

• Upcoming ETF Approvals: Decisions on XRP, Dogecoin, and Litecoin ETFs could inject fresh optimism into the market.

• FOMC Meeting in March 2025: The Federal Open Market Committee’s upcoming meeting could bring monetary policy changes that impact risk assets like cryptocurrencies.

Conclusion

The crypto market is currently undergoing a major correction due to Bitcoin’s price drop, Trump’s tariff policies, and significant ETF outflows. The fear and greed index remains in extreme fear territory, reflecting the ongoing uncertainty. However, factors like institutional Bitcoin accumulation and upcoming ETF approvals provide hope for a future rebound.