Bitcoin fell below the threshold support level of $89,000, with an intraday low within the $86,000 range.
Altcoins fared worse, with Jasmy Coin dropping to $0.01683, its lowest level since Nov. 5, and 72% below its 2024 highs. Pepe and Dogecoin also fell by over 8%, while the combined market cap of all meme coins according to CoinGecko fell below $60 billion.
Three key factors behind the crypto crash
There are three potential causes for the ongoing crypto crash.
First, the market reacted negatively to the US President Donald Trump’s signal to impose tariffs on Canadian and Mexican goods starting in March. The tariffs were postponed by a month to give allowance for negotiations targeted at drug policies and immigration.
With a 24 percent tariff on US imports, there is likely a looming inflation and slower economic growth which will force the Fed to step in to cushion the effect of the tariff. The Federal Reserve earlier indicated that it will step in to cut interest rates only when inflation edges closer to its 2% target. Recent economic data indicates headline and core inflation figures are deviating from this target.
Second, considering the mixed nature of US stocks, crypto prices are declining. Nasdaq 100 index opened 0.55% lower while S&P 500 index hardly moved. Dow Jones index was up by 0.36%. The tech sector has also slowed down as investors anticipate NVIDIA’s AI focused Q4 earnings.
Third, Bitcoin and other crypto assets like Pepe, Jasmy and Dogecoin tanked after BTC investors were triggered to sell off following a downward trend. Bitcoin has dropped to its lowest since November.
Bitcoin is currently below $89,136 edging into a bearish outlook while moving below the 50 and 100-day moving averages. If the trend continues, Bitcoin might fall to the next key support level at $73,720, the highest swing since March last year which is approximately an 18% drop from current levels. This will likely cause a further decline in other altcoins.
Investors on the other hand feel that there might be chances the current downward trend might mimick the events in Jan 13 which eventually led to a strong rebound.
