Crypto Market Cap Drops 4.2% Amid Bearish Sentiment, Tariff Wars

In the lead-up to the monthly close, the crypto market, spearheaded by Bitcoin (BTC), has been experiencing a surge in bearish sentiment. The total crypto market cap decreased by approximately 4.2 percent over the past 24 hours, settling around $2.89 trillion on Friday during the early trading session for the Western financial markets.

Over the past 24 hours, Ethereum (ETH) and Ripple Labs’ XRP prices both dropped by more than 5 percent, trading at approximately $1,909 and $2.24 respectively. This sudden crypto selloff resulted in the liquidation of more than $336 million from the leveraged crypto market, primarily affecting long traders.

One of the major forces behind today's crypto dump is the declining futures open interest. In the past 24 hours, the total Open Interest (OI) for the crypto market dropped by around 2.57 percent, hovering around $109 billion. Ripple’s XRP experienced a decline of about 3.21 percent in its OI, settling around $3.92 billion on Friday. The Ethereum market recorded a decline of 3.58 percent in its OI, hovering about $22.37 billion. Meanwhile, Bitcoin’s OI declined by around 1 percent, settling about $56.84 billion.

Another significant factor contributing to the bearish sentiment is the uncertainty caused by the U.S.-led tariff wars. Ahead of the U.S. tariff implementation on April 2, the crypto market has been experiencing increased bearish sentiment. Additionally, the high-impact news on inflation regarding the Core Personal Consumption Expenditures for monthly and yearly has added to the demand fear of further crypto capitulation.

Market data analysis from Glassnode indicates that short-term crypto investors have been offloading their holdings while long-term investors gradually accumulate. The overall demand for stablecoins has gradually increased as investors protect their capital from devaluation amid ongoing bearish sentiment.

Bitcoin, Ethereum, and XRP prices are experiencing a significant decline today, driven by a combination of factors that have heightened investor uncertainty and reduced demand. The drop in prices is largely attributed to the escalating global trade tensions, particularly those led by the United States, which have created an atmosphere of uncertainty in the market. This uncertainty has led to a risk-off sentiment among investors, causing them to sell off their holdings in these cryptocurrencies.

The decline in futures open interest also indicates a reduction in speculative trading, as traders are becoming more cautious about the market's direction. Additionally, the low demand from short-term holders compared to long-term investors suggests that many traders are adopting a wait-and-see approach, further contributing to the price drop. Veteran trader Peter Brandt has hinted at a potential Bitcoin crash to $70,000, adding to the market's pessimism as traders await the release of U.S. PCE inflation data.

The regulatory environment remains uncertain, and any changes in policy could have significant implications for the crypto market. The potential for a favorable ruling in Ripple's ongoing legal battle could boost investor optimism and lead to a bullish price movement. However, a loss in the case could trigger a sell-off, further exacerbating the current downturn.

The market's reaction to these developments highlights the sensitivity of cryptocurrencies to external factors, including geopolitical tensions and regulatory changes. As the market continues to evolve, investors will need to remain vigilant and adapt to the changing landscape to navigate the challenges ahead.