The cryptocurrency market is currently experiencing extreme volatility, driven by global economic policies and massive liquidations. In just a short time, the total crypto market cap has plunged by 7.48% to $2.91 trillion. This sharp decline has left traders stunned, with the Fear and Greed Index dropping to 29, signaling deep fear, compared to a neutral 40 just a day earlier.

Crypto Market in Turmoil

Bitcoin has fallen below its crucial support level of $90,000 and is now trading at $89,652.23. Although its market dominance has increased to 61.39%, its total market cap has shrunk to $1.77 trillion. Ethereum has also seen a sharp decline of 10.37%, landing at $2,410, while Solana and XRP are down by 12.6% and 10.67%, respectively.

The Impact of Trump’s Tariff Announcement

The key factor behind this dramatic decline is U.S. President Donald Trump’s recent announcement of a 25% tariff on imports from Canada and Mexico. During a press conference with French President Emmanuel Macron, Trump confirmed his commitment to these tariffs despite mounting economic concerns.

This announcement sent shockwaves through financial markets, with the S&P 500 falling by 2.3% and the Nasdaq dropping by 4% over the past week. As investors became more cautious, the cryptocurrency market was hit hard, leading to over $900 million in liquidations within hours.

How Low Can Cryptos Go?

Amid growing uncertainty, analysts warn of further downside risks, particularly for major altcoins. A significant trigger for this sell-off was Binance’s massive liquidation of Ethereum, Solana, TRUMP, and other digital assets. As the world’s largest cryptocurrency exchange, Binance’s actions have intensified fears of a continued downtrend.

Well-known analyst Capo cautioned that if Ethereum fails to hold its support level at $2,381, it could drop to the $1,800–$2,100 range. Bitcoin is also facing the possibility of testing the $85,000 level, and a break below this support could lead to a deeper correction.

Is This Just a Correction or the End of the Bull Run?

Despite the negative sentiment, there are still signs of hope for a recovery. Bitcoin holding above the $85,000 support level is crucial for any potential rebound. If institutional investors step in with renewed buying pressure, the market could experience a short-term rally.

For example, investment firm Strategy recently purchased 20,356 Bitcoin worth around $1.99 billion at an average price of $97,514. The company now holds a total of 499,096 Bitcoin valued at $33.1 billion. If other institutional investors follow suit, Bitcoin could regain its momentum.

Potential for Prolonged Consolidation

However, continued selling pressure from Binance, coupled with the economic impact of increased tariffs, could lead to a prolonged consolidation phase. In this scenario, Bitcoin may remain range-bound, while altcoins could continue their downward trend.

What’s Next for the Crypto Market?

• The recent drop in the crypto market was triggered by Trump’s new tariffs and Binance’s massive sell-off.
• Bitcoin could see a short-term rally if it holds the $85,000 support level and institutional investors step in.
• Ethereum risks falling to the $1,800–$2,100 range if it breaks below $2,381.
• Prolonged selling pressure and worsening economic conditions could lead to an extended consolidation phase.
• Analysts believe this correction could be a buying opportunity in preparation for the next rally. However, this depends on how economic events unfold and investor sentiment changes.

Final Thoughts: Correction or Crash?

The coming weeks will be crucial in determining whether this is just a healthy correction or the end of the crypto bull run. Investors should remain vigilant and be prepared to adapt to the rapidly changing market landscape.

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