Why is the crypto market down today?

The crypto market erased all gains from President Trump’s US Crypto Strategic Reserve announcement, plunging by over 14.7% in 24 hours to reach $2.64 trillion on March 4.

Several factors have contributed to the latest drop in crypto prices, including:

• As US tariff wars escalated, nearly $980 million was wiped off the crypto market in 24 hours.

• Investors are risk-off amid the continued correlation between US equities and crypto assets.

• Stiff resistance at 50-weekly SMA that could stifle recovery efforts.

Bitcoin leads the crypto market drop amid trade war escalation

Bitcoin (BTC), which makes up about 60% of the overall crypto market, is leading the decline after plunging 8.80% in the last 24 hours.

What to know:

• US tariffs against Mexico, China and Canada went into effect March 4.

• Beijing responded with tariffs of up to 15% on US exports.

• Ottawa hit back with 25% tariffs on $107 billion worth of US goods.

• The tit-for-tat measures have intensified global market uncertainty, prompting crypto traders to take profits.

• The selling behavior is similar to the declines that occurred after Trump’s previous tariff threats, namely the Feb. 3 and Feb. 28 market rout.

The crypto market’s drop aligns with declines across risk-on markets.

Key points:

• The S&P 500 dropped by 1.76% on March 3, while the Nasdaq composite index declined by 2.64%. 

• The Dow Jones index clocked its second consecutive daily loss, losing 1.48%. 

• “Given the strong link between $BTC and US tech stocks, Bitcoin’s long-term recovery depends on the NASDAQ100’s ability to trend higher,” analyst Stefan Luebeck argues.

Related: Atlanta Fed model predicts GDP to shrink 2.8% in Q1: Trumpcession

• In the aftermath of Nvidia officially entering a bear market, Bitcoin and the crypto market are also taking a hit, Luebeck said.

Massive liquidations accelerate the sell-off

The crypto market’s decline has further coincided with liquidations of nearly $980 million worth of positions.

What to know:

• A total of $977.80 million in liquidations has been recorded in the past 24 hours.

• Long positions took the hardest hit, with $831.96 million liquidated.

• Bitcoin and Ethereum were the biggest casualties, with $370.52 million and $193.73 million in liquidations, respectively.

• When long positions are liquidated, traders’ holdings are automatically sold, increasing market supply and driving prices lower.

Market fails to break through key distribution area

From a technical perspective, the crypto market’s decline today is part of a correction trend that started after hitting a key distribution area.

Key points:

• The crypto market has failed to decisively break above its 200-4H EMA (blue wave) since the Feb. 3 crash.

• The last attempt to reclaim the 200-4H EMA as support on Feb. 21 failed, leading to a 20%+ decline.

• As the market retests the 200-4H EMA, signs of strong selling sentiment are emerging.

• The repeated rejections at this key level suggest bears remain in control, keeping the market under pressure.

On the weekly chart:

• The crypto market’s ongoing correction appears to be part of its prevailing descending triangle pattern.

• A descending triangle is a bearish continuation pattern, forming when the price makes lower highs while maintaining a flat support level at the bottom.

• The pattern is confirmed when the price breaks below the support level with high volume and drops by as much as the triangle’s maximum height.

• As of March 4, the crypto market had entered the pattern’s breakdown stage, eyeing a decline toward $2.47 trillion.

• If selling pressure persists, the 200-week EMA (~$1.76 trillion) could become the ultimate downside target.

• Holding the 50-week EMA (~$2.63 trillion) as support may enable a bounce toward the pattern’s lower trendline, aligning with the $3 trillion level.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.