The cryptocurrency markets have faced a significant downturn, witnessing a decline of approximately 4% within just a few hours. The total market capitalization has fallen to a three-week low of $2.74 trillion, raising concerns among investors and analysts alike.
In a surprising turn of events, around $150 billion exited spot markets, leading to the liquidation of nearly 170,000 traders and totaling over $500 million in liquidations, according to data from CoinGlass.
Market leader Bitcoin saw its price plunge by more than 6%, dropping from an intraday high of $87,790 to a low of $82,277 during early trading hours in Asia on Thursday morning. Nevertheless, Bitcoin made a partial recovery, currently trading around $83,400, remaining within its established range-bound channel.
Market Reaction to Trump Tariffs
This market slump coincides with the announcement made by US President Donald Trump regarding new trade tariffs, which are set to affect 185 countries globally. This stark announcement represents one of the largest tariff impositions in US history.
According to reports, S&P 500 futures lost approximately $2 trillion in market capitalization in under 15 minutes following Trump’s announcement. Economists have characterized this new reciprocal tariff plan as a “tsunami” that is anticipated to have large-scale repercussions on the global economy.
“This is a game changer, not only for the US economy but for the global economy. Many countries will likely end up in a recession,” said Olu Sonola, head of US economic research at Fitch Ratings.
Starting April 5, Trump has implemented a 10% tariff across the board, with several countries subjected to even higher rates—China facing a 34% tariff, Vietnam 46%, the European Union 20%, and Japan 24%.
Trump described his tariff measures as “Liberation Day,” emphasizing their intention to correct the trade deficit between the US and other nations, while imports will incur both a universal tariff and specific levies targeting individual countries.
Trump is set to sign reciprocal tariffs into effect. The executive order is imminent—Liberation Day has arrived! pic.twitter.com/UoaSb1HML2
— CryptoPotato Official (@Crypto_Potato) April 2, 2025
Altcoin Market Struggles
The downturn in the crypto markets has not spared altcoins, many of which are now back in bear market territory and are experiencing sharper declines than Bitcoin. Ethereum, for instance, briefly dipped below $1,800, while XRP fell to $2, Binance Coin hovered around $600, and Solana slid below $120.
While the current trends may be unsettling, analysts suggest that major corrections during bull markets are common, advising against labeling the current situation as a bear market based on Bitcoin’s downward movement over the past couple of months.
“It’s a new #BTC Bear Market because Bitcoin has been in a downtrend for over two months”
— Rekt Capital (@rektcapital) April 2, 2025
While the market grapples with these challenges, it remains crucial for investors to stay informed and strategically navigate the evolving landscape of cryptocurrencies and global economic factors.
