Bitcoin’s Dramatic Plunge: Is the Crypto World on the Brink of a Meltdown? đŸ˜±

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  • In a turn of events that could only be described as a cosmic joke, Bitcoin’s losses have dragged the crypto fear and greed index down to a five-month low of ‘extreme fear’. Who knew digital coins could be so dramatic?
  • And what’s the culprit behind this financial farce? Why, none other than President Trump’s tariffs on our friendly neighbors, Mexico and Canada. Because nothing says “let’s invest” like a good old-fashioned trade war!

On the 25th of February, Bitcoin decided to lead the crypto market sell-off with all the grace of a drunken elephant, plummeting to a staggering $86.8k. As expected, this bearish escapade soured market sentiment faster than a milk left out in the sun, sending it down to a five-month low of ‘extreme fear’ at a paltry 25. đŸ„Ž

According to the wise sages at CryptoQuant, a whopping 37.4k BTC, worth over $3.3 billion, were sent to exchanges at a loss. Apparently, short-term holders were gripped by the fear that this plunge might just be the beginning of a slippery slope into the abyss.

What’s driving the crypto sell-off?

The risk-off sentiment saw ETH and XRP take a nosedive of 10%, while BNB managed to only trip over its shoelaces with a modest decline of 4%. Talk about a mixed bag of panic!

Solana, however, was the real drama queen, shedding 12% of its value and clinging desperately to the $140-level like a cat on a hot tin roof. Overall, a staggering $1.5 billion worth of positions ($1.38 billion longs) were liquidated in the last 24 hours, according to the crystal ball known as Coinglass data. 💾

But what, you may ask, triggered this massive sell-off? According to the crypto options trading desk QCP Capital, the market took a nosedive after President Trump decided to play economic chess with tariffs on Canada and Mexico. Because nothing says “let’s invest” like a good old-fashioned trade war!

Part of the firm’s daily market update on its Telegram group read,

“Market sentiment remains under pressure following Trump’s decision to implement tariffs on Canada and Mexico and curb Chinese investment.”

The trading desk also mentioned that institutional demand from corporations like MicroStrategy might be as scarce as a unicorn in a desert going forward. Unsurprisingly, this weak demand has been as evident as a bad pun since last December.

According to CryptoQuant, the apparent demand for BTC turned negative for the first time since last October. Coupled with low liquidity conditions, this has accelerated BTC’s downside risks faster than a rabbit on roller skates.

In fact, some analysts, like the ever-optimistic Arthur Hayes, are projecting that the low demand could drag BTC down to $70k due to a reduced BTC CME basis yield. He added that large funds might just decide to sell-off BTC if the yield declines any further. Because why not add more chaos to the mix?

Meanwhile, BTC’s recent low of $86k marked a 20% drawdown from its record high of $109.5k. However, the range had not yet been invalidated, at the time of writing. So, there’s still hope, or at least a glimmer of it, like a candle in a windstorm.

It’s worth pointing out, however, that a daily candlestick close below the range-low and bullish order block (OB, cyan) would effectively break the 3-month-long neutral market structure. Because who doesn’t love a good plot twist?

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2025-02-26 08:10