The recent rise in Bitcoin’s value to $95,000 over the weekend ended abruptly on Tuesday March 4, when it fell below $83,000. The sharp drop happened after renewed market worries after former President Donald Trump reaffirmed a 25% tariff policy. This caused many financial markets to sell off. When word of a possible U.S. strategic crypto reserve first came out, the crypto market went up, but it quickly went down again as worries about the economy took over.
Stock Market Chaos Accelerates Bitcoin’s Fall
The instability in the financial markets made Bitcoin’s sharp drop even worse. The S&P 500 lost a vast $1.5 trillion in market value and the Dow Jones Industrial Average lost over 1100 points wiping out a 300 point gain. Crypto-related stocks like Coinbase {-4.6%} and Robinhood (-6.4%) also lost a lot of value. Bitcoin fell by 9.07% as investors became less sure of the future. Ethereum fell even more, dropping 15% to $2,067, its lowest level in 15 months.
Mass Liquidations Shake Crypto
As Bitcoin fell below $83,000, many people sold their holdings. According to recent data, bearish positions worth $1.02 billion in crypto futures and long bets worth $925 million were closed. This quick wave of forced selling made the drop worse, putting more pressure on Bitcoin’s price and bringing the whole crypto market down with it. Analysts say Bitcoin could hit bottom before traditional markets and lead to a rebound in the long run, even with this correction.
Positive Outlook
Even though the prices have been increasing, everyone is now looking forward to the first White House Crypto Summit on March 7. Leading the event is David Sacks, who is the AI and Crypto Czar. The event should give more information about the U.S. strategic crypto reserve and future regulatory frameworks. Investors are still hoping that more explicit rules will make it possible for big companies to start using crypto and for the sector to grow over the long term.
Conclusion
Even though Bitcoin’s drop below $83,000 has scared investors, market experts are still optimistic about the cryptocurrency’s long-term prospects. Arthur Hayes, co-founder of BitMEX, says that Bitcoin could quickly test $70,000 if risk assets keep falling. However, less cash in the U.S. Treasury and more interest from institutions could soon start the bullish trend again.
