Crypto Market Sheds $1.3 Trillion Amid Global Selloff

ByMason Drake

Bitcoin and major cryptocurrencies have plummeted in a sharp market correction, with Bitcoin dropping below $77,000 and altcoins experiencing even steeper declines. The selloff has erased $1.3 trillion from the cryptocurrency market since January, as digital assets finally catch up with traditional markets that tumbled following President Donald Trump’s sweeping tariff announcements.

Bitcoin has fallen more than 10% from its recent high of nearly $90,000, while Ethereum, XRP, Solana, and Dogecoin have experienced even more dramatic drops, according to data reported by Forbes. This synchronized decline has market analysts concerned about the potential for a more severe crash in the coming days.

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Warning Signs for Monday Trading

“Bitcoin has recently lost the key $79,000 to $80,000 support level, which it had managed to hold for the past month,” explained Charlie Sherry, head of finance and crypto analyst at BTC Markets. “The next key support lies around $72,000, which was the pre-election high.”

Perhaps more concerning for investors is the potential impact on traditional markets. Geoffrey Kendrick, Standard Chartered Bank’s head of crypto, provided a sobering assessment: “Sometimes crypto movements on Sunday tell you what stocks are going to do Monday. If that is the case, Monday could be ugly.”

The correlation between cryptocurrency and traditional markets has strengthened following Trump’s “Liberation Day” tariff announcements, which traders fear could develop into what some analysts are calling a “crisis scenario.” The stock market has already experienced its worst crash since 2010, and cryptocurrency markets appear to be following suit.

Dogecoin Volume Collapse

Among major cryptocurrencies, Dogecoin has experienced particularly troubling dynamics. The popular meme coin has seen its daily trading volume plummet by over 90% since November 2024, when it reached highs above $60 billion. Current daily volumes remain below $5 billion, according to TradingView data.

This collapse in trading activity has coincided with a more than 50% price drop in less than six months. Sunday’s market action brought additional pain for Dogecoin investors, with more than $4 million in liquidations, over 80% of which came from long positions as bearish pressure mounted.

The meme coin’s heightened volatility has led to significantly larger percentage losses compared to Bitcoin’s 25% decline from recent highs. Analysts note this is consistent with historical patterns where alternative cryptocurrencies typically experience more dramatic swings during market corrections.

Federal Reserve Response on the Horizon?

Market observers are looking to potential catalysts that could reverse the downward trend. “A potential shift in Trump’s stance or emergency intervention by the Federal Reserve” are two factors that could help Bitcoin climb back above $80,000, according to Sherry.

Traders have already increased their bets that the Federal Reserve will be forced to cut interest rates to prevent a U.S. recession triggered by the tariff-induced market turmoil. Such a move could potentially flood the market with dollars and provide support for risk assets like cryptocurrencies.

Last week saw a significant shift in interest rate expectations, with futures markets pricing in a higher probability of rate cuts in the coming months. This change reflects growing concerns about economic stability following the implementation of broad tariffs against nearly 90 countries.

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Contrarian Bullish Views Persist

Despite the overwhelming bearish sentiment, some analysts maintain optimistic outlooks, particularly for Dogecoin. Crypto analyst Trader Tardigrade has identified chart patterns similar to those seen in 2016 and 2021 before significant price rallies.

In a post on X (formerly Twitter), the analyst suggested Dogecoin could experience a surge of more than 1,500%, potentially reaching as high as $2.10. This contrarian view stands in stark contrast to current market sentiment but highlights the divided opinions about cryptocurrency’s immediate future.

As investors brace for Monday trading, all eyes will be on whether traditional markets follow cryptocurrency’s weekend plunge, potentially triggering further selling across asset classes. With key support levels already broken, cryptocurrency traders are preparing for continued volatility in the days ahead.

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Mason Drake

Mason has been covering the exciting and fast-pasted crypto space since the early days of Bitcoin. From decentralized finance to NFT trends, he provides deep analysis on where the industry is headed and what it means for investors.

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