Why did today's cryptocurrencies decline? The chain of political instability and market panic

Today, the cryptocurrency market was hit by significant turmoil. Multiple factors are intertwined, rapidly increasing investors’ anxiety. Political uncertainty, a chain of market liquidations, and a deterioration of investor sentiment are triggering a decline across the entire cryptocurrency spectrum.

Uncertainty in U.S. Tariff Policy Shakes the Market

Former President Trump’s warning about increasing import tariffs on Canada and Mexico has significantly unsettled market sentiment. A 30-day pause is set to end soon, and the uncertainty surrounding the global economy is rapidly rising. Due to concerns that this political uncertainty will spill over into the financial markets, investors are showing a tendency to seek refuge in safer assets.

In the market, positions worth $914 million were liquidated within 24 hours. This suggests that market participants are accelerating their withdrawal from physical assets. Trading volume surged by 75.57% compared to the previous day, reaching $143.57 billion, clearly indicating an increase in speculative selling. The fear and greed index dropping to 29 succinctly shows that investor sentiment is dominated by concerns about the overall economy.

Bitcoin and Altcoins Decline, Deterioration of Investor Sentiment is Evident

Looking at specific price trends, the decline in the cryptocurrency market is widespread. Bitcoin (BTC) fell 0.57% in 24 hours and is currently trading at $66.55K. The dominance of Bitcoin, which indicates its influence over the overall market, stands at 55.22%, suggesting a reorganization of market share is underway.

Major altcoins are also in a bearish market. Ethereum (ETH) has dropped 1.30% in 24 hours, while Solana (SOL) has decreased by 2.18%. XRP recorded a decline of 1.77%. SUI and AAVE are showing larger drops, recording decreases of 4.71% and 2.96%, respectively. The differences in these declines suggest that stock selection is progressing within the market.

Signs of Recovery Amid Market Volatility

Amid the overall bearish market, there are signs of recovery. DEXE has risen by 2.22% in 24 hours, and PAXG has also recorded a positive return of 0.26%. Notably, even in an environment where many assets are declining, certain assets are garnering support. This indicates that investors are not merely exiting the market but are making selective adjustments in their asset allocation.

The current cryptocurrency market continues to be in an increasingly unstable state due to rapid deterioration in market sentiment, in addition to political uncertainty. Investors are wary of potential spillover effects into the financial markets and are reevaluating their holdings of digital assets. Whether future policy developments will accelerate this downward trend or provide a turning point is the focus of the market.