The cryptocurrency market experienced a sharp decline on Tuesday, with Bitcoin extending its losses by falling more than 3.5% over 24 hours and briefly dropping below the key support level of $63,000. Other major cryptocurrencies followed suit, with Ethereum falling below $1,900. Over the past 24 hours, the overall crypto market fell by more than 2%, with its total market capitalization dropping to $2.25 trillion, wiping out over $480 billion in value. During this period, more than 114,000 traders faced liquidation.
Mounting tariff tensions and expanding geopolitical risks have weakened market risk sentiment, prompting capital to flow out of high-volatility assets, which has become a major drag on the market. Analysts suggest that Bitcoin's critical $60,000 support level is under close watch, as a break below it could open the door to a decline toward the $50,000 range.
The sell-off was widespread. Not long ago, Bitcoin had fallen to around $60,000 before staging a brief rebound. However, this did not signal a reversal, as digital currencies have resumed their decline in recent trading sessions. Today, Bitcoin dropped below $63,000, falling more than 3.5%, and has declined 7.5% over the past seven sessions. Ethereum also plunged, slipping below $1,900 with a loss of over 8%. XRP, Binance Coin, and Dogecoin joined the downturn, falling 10%, 5%, and over 8%, respectively, in the past week. Crypto-related stocks also came under pressure. Digital asset brokerage Robinhood fell 5.7%, while Strategy, the publicly listed company holding the most Bitcoin, dropped 5.6%.
Analysts believe that geopolitical and tariff uncertainties continue to weigh on the market. Last Saturday, former President Trump announced plans to raise global tariffs to 15%, an additional 5 percentage points from the previous day, a move seen as a significant blow to risk assets. He intends to invoke Section 122 of the Trade Act of 1974 to implement the new tariffs. However, this provision only allows tariffs to remain in effect for 150 days unless extended by Congress. A Wall Street Journal report on Monday indicated that the Trump administration is evaluating alternative legal avenues to advance a new round of tariff measures.
Jim Reid, a strategist at Deutsche Bank, noted that the tariffs leave considerable uncertainty. He pointed out that Section 122 was originally designed as a temporary tool to address balance-of-payments emergencies, and if repeatedly extended, it could face more legal challenges in the future.
Market participants widely expect the $60,000 level to be a key support closely monitored by bulls. If this level fails to hold, Bitcoin could decline toward the mid-to-lower $50,000 range.
Historical data also suggests the potential for deeper selling in Bitcoin. History shows that Bitcoin rarely bottoms until the 50-week moving average falls below the 100-week moving average. This so-called "death cross" has marked the end of every major bear market, including those in 2022 and 2018.
However, this signal is far from being triggered, as the 50-week moving average remains well above the 100-week moving average. Therefore, if past data is any guide, the market may decline further, potentially falling to $50,000 or lower, before the moving averages turn bearish and trigger a wave of capitulation.
Christopher Hamilton, Head of Client Investment Solutions for Asia Pacific (ex-Japan) at Invesco, described Bitcoin's recent pullback as "more of a typical risk sentiment reset" rather than a crypto-specific shock. He also suggested that the decline is more likely a tactical de-risking move rather than a structural outflow of capital.
On the other hand, the recent weakness in the cryptocurrency market also reflects ongoing dollar liquidity issues. Current conditions in U.S. money markets and leverage levels show no signs of liquidity improvement. Moreover, the Federal Reserve has not accelerated its balance sheet expansion, with a contraction observed last week. Analysts believe that until these indicators show significant improvement, the contraction in the cryptocurrency market may persist. Stock markets are also likely to face corresponding impacts.