Why Is Crypto Crashing? Will It Recover Today After a 3-Day Slump?

By / / Crypto News, Daily News
Why Is Crypto Crashing? Will It Recover Today After a 3-Day Slump?
Table Of Contents
  1. Why is Crypto Crashing? Major Reasons Behind the Market Downturn
  2. Market Sentiment: Extreme Fear Dominates
  3. Will Crypto Recover Soon? Key Factors to Watch
  4. Conclusion: Is This a Buying Opportunity?

Crypto Market Down Again: What’s Causing the Drop? The cryptocurrencyJ market has taken a sharp hit over the last three days, leaving investors questioning: Why is crypto crashing? and Will it recover soon? The global crypto market cap currently stands at $2.64 trillion, marking a 6.15% decline in the past 24 hours. Major assets like Bitcoin and Ethereumhave suffered significant losses, deepening concerns over whether the bull run is over.

Why is Crypto Crashing? Major Reasons Behind the Market Downturn

1. Bitcoin Drops Below $80K for the First Time in Months

Bitcoin, the largest cryptocurrency by market cap, has dipped below $80,000—a level not seen in four months. As of now, BTC is trading at $80,100, marking an intraday drop of 5.51% and a weekly decline of 18.08%.

Technical indicators suggest further downside potential. Analysts point to a bearish Moving Average Convergence Divergence (MACD) crossover on the weekly chart—a signal that previously led to 40% corrections in Bitcoin’s price. If this pattern repeats, BTC could slide toward $68,000, fueling more fear in the market.

2. Trump’s Tariffs on China & Mexico Shake Market Confidence

Geopolitical concerns are adding to the volatility. Former U.S. President Donald Trump announced a 10% tariff on Chinese goods while reaffirming 25% tariffs on imports from Mexico and Canada, effective March 4.

These tariffs have created economic uncertainty, impacting riskier assets like cryptocurrencies. Additionally, Trump’s previously pro-crypto stance appears to be unfolding slower than anticipated, leading to investor disappointment. Political-themed memecoins and Trump-linked tokens have also plunged, adding to the overall bearish sentiment.

3. Bitcoin & Ethereum ETFs Face Major Outflows

Institutional investors are pulling money out of crypto-based exchange-traded funds (ETFs), worsening the downturn.

  • Bitcoin ETFs recorded a daily net outflow of -$275.83M, with total assets standing at $94.3B.
  • Ethereum ETFs saw -$45.02M in daily outflows, bringing total assets to $8.35B.

This decline in institutional confidence is a key factor behind the ongoing price drop, sparking fears that the crypto bull run could be ending.

Market Sentiment: Extreme Fear Dominates

The Crypto Fear & Greed Index has plummeted from 10 (Extreme Fear) to 16 (Extreme Fear) in just 24 hours. Last week, the index stood at 55 (Greed), and just a month ago, it reached 72 (Extreme Greed). The rapid shift highlights growing uncertainty among investors.

Historically, extreme fear has signaled buying opportunities before market recoveries. However, with ongoing regulatory concerns and weak investor confidence, traders remain cautious.

Will Crypto Recover Soon? Key Factors to Watch

Despite the current slump, several factors could support a market recovery:

  • MicroStrategy’s Massive Bitcoin Purchase: The firm recently acquired 20,356 BTC worth $1.99B at an average price of $97,514 per Bitcoin—a strong sign of institutional confidence.
  • Upcoming ETF Approvals: Decisions on XRP, Dogecoin, and Litecoin ETFs could inject optimism and fresh capital into the market.
  • March 2025 FOMC Meeting: The Federal Reserve’s policy decisions will be crucial for risk assets like crypto. A favorable stance could spark a rebound.

Conclusion: Is This a Buying Opportunity?

The crypto market correction is being driven by multiple factors, including Bitcoin’s price drop, geopolitical trade tensions, and institutional outflows. The Fear & Greed Index remains in extreme fear, reflecting high uncertainty.

However, long-term investors remain optimistic. Institutional Bitcoin purchases and upcoming ETF decisions could act as catalysts for recovery. While volatility is likely to continue, crypto markets have historically bounced back stronger after downturns. Investors should stay informed and prepare for potential opportunities in the coming weeks.

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