Crypto Market Decline: Trump’s Tariffs Not the Sole Cause
According to Santiment, a leading crypto analytics firm, retail traders were quick to blame the recent crypto market decline on US President Donald Trump’s announcement of a 100 percent tariff against China. However, analysts believe that the reason for the market collapse lies deeper than tariffs alone. This phenomenon is often referred to as “rationalization behavior,” where traders seek to attribute a single event to a downturn in the market.
Santiment noted that discussions about the tariff concerns between the US and China increased among crypto market participants, with many traders pointing to the geopolitical event as the trigger for the market decline. However, analysts at The Kobeissi Letter argue that “excessive leverage and risks” in the crypto market also played a significant role in the collapse. The significant liquidation event, which saw $16.7 billion of long positions liquidated compared to $2.5 billion of short positions, highlights the market’s vulnerability to sudden changes.
The Bitcoin (BTC) price fell more than 10% in 24 hours, with the BTC/USDT futures pair on Binance falling as low as $102,000 following Trump’s tariff announcement. At the time of publication, Bitcoin is trading at $109,910, down 10.06% over the past seven days, according to CoinMarketCap.
US-China Developments to Impact Retail Crypto Investors
Santiment believes that developments between the US and China will be “central” to retail crypto investors’ trading decisions, at least in the short term. If talks between Trump and Xi improve and result in “positive news,” retail sentiment towards cryptocurrencies is likely to improve. However, if tensions escalate, traders should prepare for more pessimistic price forecasts, with some predicting that Bitcoin could fall below $100,000.
The Crypto Fear & Greed Index, which measures overall crypto market sentiment, fell to a “fear” level of 27 in Saturday’s update, representing a sharp 37-point decline from Friday’s “greed” reading of 64. This significant shift in sentiment highlights the market’s vulnerability to sudden changes and the need for traders to stay informed about global events.
Expert Insights and Forecasts
Analysts agree that the crypto market’s behavior is more akin to a risk asset than a safe haven during times of tension. As such, traders should be prepared for increased volatility and potential price fluctuations. For more information on the crypto market and its relationship with global events, visit https://cointelegraph.com/news/crypto-traders-us-donald-trump-tariffs-market-decline-santiment?utm_source=rss_feed&utm_medium=rss_tag_altcoin&utm_campaign=rss_partner_inbound
