Crypto Market Plummets 2% as US Trade Tariffs Spark Sell-Off

Bitcoin and other cryptocurrencies experienced a significant price decline at the start of the week, with Bitcoin dropping to a low of $76,500. This downturn was not isolated to the digital assets market, as the United States equities market also saw substantial losses. The widespread market downturn was attributed to economic uncertainty, exacerbated by the ongoing trade tariffs imposed by the United States President.

Several experts have commented on this scenario, with prominent crypto analyst Burak Kesmeci predicting which market would recover first. Kesmeci's analysis is based on the high correlation between cryptocurrencies and the US stock market. He explained that Bitcoin and Ethereum have a strong correlation with the S&P 500 index, which is considered a key indicator of US equities market performance. This correlation suggests that investors view digital assets similarly to US stocks, leading to significant selling pressure in the crypto market whenever new trade tariffs are announced.

Kesmeci noted that gold, on the other hand, has reached new highs recently. The VIX (fear) index, which measures market volatility, is strongly negatively correlated with Bitcoin. This explains why Bitcoin's price is falling as the VIX index rises. The analyst also pointed out that the DJI and S&P 500 indices are below the 200-day simple moving average for the first time since October 2023. According to Kesmeci, these US stock market indices would need to move above the SMA200 again before the crypto market could recover.

As of the latest update, the price of Bitcoin stands at around $84,050, reflecting a 0.3% increase in the past 24 hours. Despite this slight recovery, Bitcoin is still down by more than 2% over the past week. This price movement underscores the volatility and uncertainty in the crypto market, which is closely tied to the performance of the US equities market.