Crypto markets plummet amid stock market sell-off

Bitcoin price plummeted from $93,400 to $86,900 on Tuesday, its lowest point since November, as a risk aversion sentiment prevailed in markets. If BTC price declines, support can be found at $85,000, while resistance may be encountered at $99,300. 

Ethereum price also faced heavy losses on Tuesday, plunging from $2,640 to $2,360, then rising to $2,460 by the end of the day. If Ethereum's price declines, it may encounter support near $2,300, while if it increases, resistance may be encountered near $2,860.

Bitcoin's price registered a new all-time high of $109,880 in January but has since been under pressure from increased risk aversion. On Tuesday, it fell hard, losing more than 20% of its value from its all-time high last month.

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. The uncertainty over Trump’s future policies and trade tariffs is generating a risk-aversion sentiment, putting pressure on crypto markets.

Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. In addition, Trump reaffirmed this week that he intends to impose tariffs on Canada and Mexico. Trump’s plans of imposing 25% tariffs on Canada and Mexico were postponed for a month after both countries agreed to tighten border activities. Trump, however, stated that he intends to go ahead with imposing tariffs on his neighboring countries on March 4. If Trump goes through with these heavy tariffs, global inflation is likely to rise and the economic outlook will worsen, thus promoting a risk aversion sentiment, which puts pressure on crypto markets.

Renewed anxiety over US trading tariffs on Tuesday triggered a broader stock market sell-off. Tech stocks in particular were hit hard, intensifying the negative sentiment that prevailed in crypto markets. 

Trump’s proposed plans to build a Bitcoin strategic reserve have boosted the price of Bitcoin. Moreover, growing expectations that the US government will adopt a pro-crypto regulatory and fiscal policy are boosting crypto markets. 

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds rate at 4.25% to 4.50%.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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