On Sunday, the cryptocurrency market faced a sharp decline as Bitcoin fell below the $82,000 mark, leading to significant market losses.
Sharp Decline in Bitcoin and Altcoins
Last week, Bitcoin was trading at $88,000, but on Sunday, the price fell to $81,700, decreasing by 2% in the last 24 hours. Altcoins, such as Avalanche (AVAX), Polygon (MATIC), Near (NEAR), and Uniswap (UNI), were more heavily affected, losing about 10% in value. The cryptocurrency market capitalization shrank by $115 billion.
Ethereum and ETF Market
Ethereum (ETH) dropped to $1,775, reaching its lowest point in nearly four years. The lack of demand for spot ETH exchange-traded funds (ETFs), which have not attracted any inflows since March, is one of the reasons for Ethereum's decline. On the other hand, Bitcoin ETFs received over $1 billion in the first two weeks, suggesting a shift of institutional investors towards BTC.
Impact on Traditional Market
The sell-off was not confined to cryptocurrency. The S&P 500 and Nasdaq fell by 2% and 2.8%, respectively, reflecting investor uncertainty. Crypto-related stocks also took a hit, with MicroStrategy (MSTR) plunging 10% and Coinbase (COIN) dropping 7.7%. These events occurred ahead of the new U.S. tariffs set to commence on April 2nd, targeting the auto, pharmaceuticals, and semiconductor industries. Potential inflation risks could negatively affect the market, continuing the trend of increased volatility. This results in a high correlation between Bitcoin and stocks, emphasizing the impact of broader economic factors on cryptocurrency's price.
The current global market events highlight the instability of both the cryptocurrency and traditional financial markets, noting the increased connection between them during periods of global economic uncertainty.
