by Aima Raza
Expert research shows the cryptocurrency market will become more unpredictable since macroeconomic elements push investors into risk-avoided choices. Recent political changes, including trade regulations and economic policy doubt, have made market conditions unpredictable.
The Kobeissi Letter shows investors moved $500 billion away from cryptocurrencies during the previous 24 hours, making back only a small fraction of what they gained after Donald Trump announced his crypto reserves.
What is happening with crypto?
Crypto markets are now worth -$100 billion LESS than they were prior to the US Crypto Reserve announcement.
Over the last 24 hours, crypto has erased -$500 BILLION of market cap in a massive reversal.
Here's what you need to know.
(a thread) pic.twitter.com/xlsqsnQKKd
— The Kobeissi Letter (@KobeissiLetter) March 4, 2025
The release of the planned crypto reserve plan featuring Bitcoin and Ethereum comprised a large part of the digital asset investment portfolio. It raised the total market value to $3.1 trillion within 10 hours from its initial $2.7 trillion assessment. After a brief uptick, the market sank to a value of $2.6 trillion.
Market Unrest Hurts Bitcoin
Experts label the unexpected market drop as a huge deception that hurt most investors who bet for higher prices. In late February, the crypto industry pulled $2.6 billion from its funds and surpassed its 2024 record by $500 million for the largest such movement.
During the announcement period, Bitcoin dropped by 3% to reach a new low, losing $250 billion of its total market value over 12 hours. The price of Ethereum dropped to $2,002 during a major market decline following its earlier boost.
Financial markets experienced global declines at the same time as the cryptocurrency market fell. The S&P 500 index lost almost 5% in value, and major tech company Nvidia experienced heavy market declines.
The market drop occurred immediately after Trump revealed his decision to impose a 25% tariff on Canada and Mexico for four days starting on March 4, ending negotiations at the last minute. The countries increased their trade sanctions after both declared equal counter-actions. China made the situation worse by increasing tariffs on US products by 10-15% before a planned 20% tariff started.
The main factor pushing markets towards safety now stems from worldwide investors seeking defensive strategies. According to The Kobeissi Letter, the global move to risk-free assets is forcing all investments to drop.
Bitcoin Declines As Gold Rises
Investors show a stronger belief in Bitcoin as a safety asset but still evaluate it differently from conventional assets. Research shows that investors rely more on gold due to market trends. Over this current period, from January 1, gold prices increased by 10% while Bitcoin experienced a 10% decrease. Experts now believe networks using digital assets should no longer be classified as safe investment instruments.
More market ups and downs will occur during the following few weeks. The volatility shock index at Goldman Sachs rose from 1.4 in December to 9.1 last Friday as markets approached similar movement patterns to major accidents. Independent analysts predict that cryptocurrencies will experience severe market swings that will continue as the new standard behavior.
Bank of America scores show Bitcoin will likely perform poorly during a widespread trade war, although 58% of investors believe gold remains the preferred protective asset for 2025.
In a recent interview, the Crypto Research Strategist from 21Shares thought the market’s response to trade tariffs was overblown. The strategist stated that most investors predicted this outcome before market hours.
#blockchain #crypto, #decentralized, #distributed, #ledger
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