Crypto Market Plummets 3.8% as Bitcoin Drops to $83,800

The cryptocurrency market experienced a significant downturn on Friday, with Bitcoin plummeting from around $88,000 to $83,800, marking a 3.8% decline in just 24 hours. This drop wiped out nearly all the gains from earlier in the week, and the market shed a staggering $115 billion in value. Major altcoins such as Avalanche (AVAX), Polygon (POL), Near (NEAR), and Uniswap (UNI) also took a hit, losing almost 10% of their value.

Ethereum, in particular, struggled, dropping over 6% and hitting its weakest price against Bitcoin since May 2020. This decline is part of a broader market correction that has seen over $116 billion wiped out in a single day. The reasons behind this crash are multifaceted, including the escalation of trade wars impacting risk sentiment, liquidations of overleveraged futures positions, and prevailing bearish technical indicators.

Ethereum's price decline is particularly notable, with low demand and selling pressure contributing to its underperformance. This underperformance is exacerbated by low demand from buyers, with selling pressure weighing heavily on ETH. The overall crypto market sentiment has turned bearish, with major assets like Ethereum and Bitcoin registering massive price drops. This bearish sentiment is further compounded by the fact that Ethereum ETFs have failed to attract new investments since early March, unlike Bitcoin ETFs which have seen over $1 billion in inflows over the last two weeks. This lack of investment in Ethereum ETFs suggests a lack of confidence in the asset, contributing to its price decline.

The downturn wasn’t just limited to digital assets. The broader U.S. stock market also saw a sharp decline following the release of weak economic data. The February inflation report showed a 2.5% year-over-year rise in the price index, with core inflation at 2.8%, slightly above expectations. Consumer spending only grew by 0.4%, with adjusted figures indicating weak economic growth. The Federal Reserve’s GDPNow model now predicts the U.S. economy could shrink by 2.8% in the Q1, raising fears of stagflation. Plus, new U.S. tariffs set to take effect on April 2 have added to investor concerns.

Bitcoin’s drop to $84,000 was anticipated due to the CME futures gap from earlier this week. Historically, BTC tends to revisit these gaps and this pullback was likely. However, with Bitcoin closely following the Nasdaq’s movements, a continued downturn in U.S. stocks could lead to further losses in crypto. Despite the ongoing correction, some experts see long-term positives. Joel Kruger, a strategist at LMAX Group, pointed out that crypto adoption is growing, with major financial institutions expanding their involvement. While more short-term dips could occur, he expects strong support around the $70,000–$75,000 range, making a potential recovery later this year more likely.

Crypto analyst Michaël van de Poppe warns that Bitcoin is losing momentum, with key liquidity levels below $84K at risk. If BTC breaks this support, further declines could follow. He suggests another week of drops might be on the way before a potential rebound in Q2. Despite the current bearish outlook, some analysts remain optimistic about Ethereum's future. One analyst has predicted a potential rally to $4000, citing the sensitivity of the price to buy-side pressure as fewer coins are available for trading. However, this prediction is based on the assumption that the market will recover from its current downturn, which is not guaranteed.