Summary:
Bitcoin fell over 3%, while Ether dropped 6% to a low of $1,756.
The Nasdaq 100 Index experienced its worst day since October 2022, dropping 3.8%.
Trump's Bitcoin reserve executive order has left the market exposed to macroeconomic risks.
Market reaction to the reserve announcement is seen as overly exaggerated.
Exchange-traded funds tied to digital assets saw declines over 30% during the selloff.
Market Reaction to US Stock Selloff
Cryptocurrencies faced a significant downturn as fears from a selloff in US equities overshadowed President Donald Trump’s recent initiatives to support the industry.
Bitcoin and Ether Price Movements
On Tuesday morning in Asia, Bitcoin dropped over 3%, while Ether plummeted 6%, hitting an intra-day low of $1,756, the lowest since October 2023. Although both cryptocurrencies managed to recover some of their losses later, the initial decline was alarming.
US Stock Market Impact
The decline in crypto values coincided with a sharp drop in US stocks, particularly in the technology sector. The Nasdaq 100 Index suffered its worst day since October 2022, falling 3.8%. Concerns are mounting on Wall Street, especially after Trump indicated potential economic disturbances due to trade tensions with Canada, Mexico, and China. Many strategists and economists are now increasing their predictions for a US economic downturn.
Industry Reactions
Joshua Lim, Co-Head of Markets at FalconX Global, noted that the Bitcoin reserve executive order has removed a positive catalyst for crypto prices, leaving the market vulnerable to macroeconomic risks.
Trump's announcement of a US Bitcoin reserve and additional stockpiles of other cryptocurrencies ahead of a crypto summit on March 7 did not significantly improve market sentiment. The order tasked the Treasury and Commerce departments with developing budget-neutral strategies for Bitcoin acquisition, indicating no new investments would be made.
Hayden Hughes, head of crypto investments at Evergreen Growth, expressed that the market's reaction to the reserve announcement seems exaggerated and suggested that it may be overly oversold.
ETF Performance
The market-wide selloff severely impacted exchange-traded funds (ETFs) tied to digital assets, with two ETFs linked to MicroStrategy plummeting over 30% in a single day.
As of 10:52 a.m. on Tuesday in Singapore, Bitcoin was trading at $79,300. Analysts predict support levels at $73,000 and $70,000, with expectations for strong buying at these prices.
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