Key Points
- Bitcoin led a crypto market sell-off, causing market sentiment to hit a five-month low of ‘extreme fear’.
- The sell-off was triggered by President Trump’s tariffs on Mexico and Canada.
Bitcoin recently led a significant sell-off in the crypto market after a sharp drop to $86.8k. This bearish move resulted in market sentiment plunging to a five-month low of ‘extreme fear’ at 25.
Data from CryptoQuant shows that 37.4k BTC, valued at over $3.3 billion, were sent to exchanges at a loss. This was due to short-term holders fearing a potential extension of the plunge.
What Triggered the Crypto Sell-Off?
The risk-off sentiment saw other cryptocurrencies like Ethereum (ETH) and XRP dump by 10%. However, Binance (BNB) recorded a limited decline of 4%. Solana was the hardest hit, shedding 12% of its value and barely maintaining the $140-level.
The crypto options trading desk QCP Capital suggests that the market tanked after President Trump enforced tariffs on Mexico and Canada. The firm also mentioned that institutional demand from corporations like MicroStrategy could be limited going forward.
Low Demand and Increased Risks
According to CryptoQuant, the demand for BTC turned negative for the first time since last October. These conditions, along with low liquidity, have increased BTC’s downside risks. Some analysts, like Arthur Hayes, are projecting that the low demand could push BTC down to $70k due to reduced BTC CME basis yield.
BTC’s recent low of $86k marked a 20% drawdown from its record high of $109.5k. Worth noting is that a daily candlestick close below the range-low and bullish order block would effectively break the neutral market structure that has held for the past three months.
