On Friday, XRP and Dogecoin (DOGE) plunged over 10%, leading the losses among major cryptocurrencies as the confirmation of fresh U.S. tariffs on Chinese imports sent ripples through Asian markets. This drop added to an already tumultuous week for cryptocurrencies, raising concerns among investors.
In a striking turn of events, Bitcoin (BTC) dropped by 7%, falling to nearly $79,000 for the first time since November. This decline represents a staggering 30% decrease from its peak of over $108,000 in January. Other cryptocurrencies such as Ether (ETH), Cardano’s ADA, and BNB Chain’s BNB also experienced significant losses, each declining by at least 9% during this turbulent period.
The overall market capitalization of cryptocurrencies fell by 8%, dropping to $2.7 trillion. This decline effectively reversed all gains made since U.S. President Donald Trump was elected in early November. The wide-ranging CoinDesk 20 (CD20) index also suffered, dropping nearly 9% in response to the market's negative sentiment.
Despite a robust earnings report from Nvidia on Wednesday, the overall market sentiment remained gloomy. The combination of renewed tariff concerns, a slowing global economy, and overstretched market positioning has significantly affected investor confidence. Traders noted that Bitcoin's high correlation with the S&P 500 index has led to its vulnerability amid these economic uncertainties.
Augustine Fan, head of insights at SignalPlus, shared his thoughts on the current market conditions with CoinDesk via Telegram. He stated, “On a year-to-date basis, ex-BTC tokens and trading sentiment have struggled mightily, with liquidity being depleted from the numerous memecoin runs. BTC has also buckled under the weight of ETF selling, which reached record highs last week.”
The losses in the crypto markets echoed those of Chinese stocks, which faltered after Trump announced a new 10% tariff on Chinese imports. This tariff escalates concerns about a growing trade war between the U.S. and China, the two largest economies in the world. The new tariff compounds an existing 10% tax on Chinese goods that was implemented earlier this month, raising fears of further economic strain on China, which is already grappling with a property crisis and declining prices.
This situation could also hinder a potential stock market rise that has been fueled by advancements in China's AI sector, including innovations from the ChatGPT rival DeepSeek. Looking ahead, China's upcoming National People’s Congress, set to commence next week, is expected to address economic plans and growth goals. Any decisions made regarding increased spending or stimulative measures to bolster the economy could significantly impact Bitcoin and crypto prices, serving as a crucial market catalyst.
Despite the potential for market catalysts, the mood among many Bitcoin traders remains bearish. Fan remarked, “Bullish option speculators are throwing in the towel as volatility decreases alongside a lower spot price, with calls being dumped in favor of puts.” Additionally, concerns surrounding MicroStrategy (MSTR), which fell 10%, are contributing an extra layer of risk to BTC, as their convertible funded buying puts bearish sentiment at an extreme level according to many technical indicators.
