Broader Crypto Market Still Strugling
Over the past 24 hours, Bitcoin (BTC) dropped 2% sparking a broader crypto market decline, with major cryptocurrencies falling up to 5%. BTC hit resistance at $84,000 on Sunday and was trading around $83,300 on Monday afternoon in Asia. The broader market pressure is being felt in the world of crypto, as uncertainty is still high.
XRP, Solana (SOL), Cardano (ADA), and Dogecoin (DOGE) fell by as much as 5%, while BNB Chain (BNB) was the only major gainer, rising 3%. The market has remained stagnant since last week’s sell-off, driven by U.S. tariffs and worsening macroeconomic conditions. Concerns about a U.S. recession, linked to tariffs introduced by President Donald Trump, have fueled ongoing volatility as crypto continues to track U.S. equities. Many analysts are concerned that we still do not know the full extent of the effects the U.S. tariffs could have on the economy, fueling the feeling of uncertainty in the markets.
Despite the lull, analysts foresee increased volatility in altcoins and meme coins. Nick Ruck of LVRG Research noted rising altcoin trading volume, suggesting traders may shift focus from Bitcoin and Ethereum to seek better returns.
Some traders believe the recent sell-off was triggered by the unwinding of ETF and spot-linked trades. Augustine Fan of SignalPlus explained that multi-strategy hedge funds—using tactics like arbitrage and leverage—may have exited positions, intensifying the sell-off. A common strategy, the "basis trade," involves buying spot BTC via ETFs while shorting BTC futures. When profit margins shrink, hedge funds liquidate positions, adding selling pressure, especially amid tariff-related volatility. Over the past 30 days, there were only 4 positive days, while the rest had considerable outflows.
Still, bullish investors maintain a "buy-the-dip" mentality. Fan noted that outside of large-cap stocks, equity valuations remain reasonable, and economic data could outperform expectations, reinforcing confidence in buying during market downturns. Others yet urge caution, citing the increasing CPI numbers in the U.S. as the potential driver of bad news that will pull the economy down.