Why did crypto crash today? Diving into the ongoing market turmoil

• Bitcoin dropped below $92K, triggering over $2 billion in liquidations as fear gripped the market.
• Trump’s new trade tariffs and shifting investor sentiment fueled uncertainty, leading to a sharp crypto sell-off.

The cryptocurrency market suffered a significant crash today, with the total market capitalization plunging to $3.06 trillion from a recent high of $3.8 trillion.

Bitcoin [BTC], Ethereum [ETH], and other major cryptocurrencies experienced sharp sell-offs, triggering widespread liquidations and heightened investor panic.

But what exactly caused this market meltdown? Let’s break it down.

Key reasons behind the crypto crash

Trump’s new trade tariffs and economic uncertainty

One of the primary catalysts behind today’s crash is President Donald Trump’s announcement of new U.S. tariffs. These include a 25% tariff on imports from Mexico and most Canadian products, and a 10% tariff on Chinese goods. 

These policies have rattled financial markets, with investors fearing a prolonged trade war and economic downturn. Traditional markets also reacted negatively, with the Australian dollar hitting its lowest level since the pandemic.

As global financial instability increases, risk-on assets like crypto tend to suffer, leading to sharp declines.

Broader market weakness and profit-taking

The crypto market has been on a strong uptrend recently, with Bitcoin surpassing the six-figure mark for the first time.

However, this rally left the market vulnerable to sharp corrections, especially as traders looked to lock in profits at psychological resistance levels. 

AMBCrypto’s analysis of the market cap chart showed a strong sell-off after multiple retests of the $3.5 trillion range, suggesting that many traders decided to exit at peak valuations.

The inability to sustain momentum at higher price levels triggered a chain reaction of selling across the market.

Source: CoinMarketCap

Fear-driven market sentiment

The Crypto Fear and Greed Index was at 39 (Fear) at press time, a stark contrast from the Neutral 55 recorded last week.

The rapid shift in sentiment suggests that investors are becoming increasingly risk-averse amid broader market uncertainties.

Fear-driven market conditions have historically led to prolonged downturns as traders rush to protect capital, exacerbating the selling pressure.

The decline in sentiment is evident in the overall market volume, which surged to $306.56 billion, signaling panic-driven exits.

Source: CoinMarketCap

Market-wide sell-offs and liquidations

The crypto market experienced an abrupt downturn, with Bitcoin dropping from its recent highs of over $100,000 to an intraday low of $91,995—a staggering drop of over 8%.

Ethereum and other altcoins followed suit, with billions wiped out in minutes.

According to liquidation data, over $2 billion worth of positions were liquidated in the last 24 hours, with Ethereum alone accounting for $600 million in forced liquidations.

The sharp price declines triggered cascading stop-loss orders, intensifying the selling pressure.

What’s next for crypto?

While short-term panic has set in, evaluating whether this crash is a momentary correction or the start of a prolonged bear phase is important.

The Fear and Greed Index suggests further downside risk, as investors move into risk-off mode.

However, fear levels around 30-40 have historically presented buying opportunities, particularly for long-term investors looking to accumulate at discounted prices.

The next few days will be crucial in determining whether Bitcoin and other assets can find support and stabilize.

Key levels to watch include Bitcoin’s support zone around $92,000-$95,000. If BTC holds above this range, a short-term rebound is possible.

A market cap recovery above $3.3 trillion could signal renewed bullish momentum, while continued declines toward $2.8 trillion would indicate a prolonged correction.

Investors should monitor any policy changes or economic updates that may impact risk sentiment further.