Hopes for the growth of cryptocurrencies collapsed on Friday, when a sudden sell-off negated almost the entire weekly gain.
Bitcoin (BTC), which was holding just below $88,000 yesterday, recently fell to $83,800, losing 3.8% in a day. The CoinDesk 20 index, reflecting the market situation, decreased by 5.7%, while coins such as Avalanche (AVAX), Polygon (POL), Near (NEAR) and Uniswap (UNI) lost almost 10% over the same period. As a result, the total market capitalization of cryptocurrencies decreased by $115 billion, according to TradingView data.
Ethereum ($ETH ) suffered too, falling by more than 6%. Moreover, in relation to bitcoin, it has reached its lowest level since May 2020. Interest in ETH exchange-traded funds has remained low since the beginning of March, while bitcoin funds have raised more than $1 billion in the last two weeks, indicating a difference in investor sentiment.
The drop in cryptocurrencies coincided with a correction in the US stock market: the S&P 500 index fell by 2%, and the Nasdaq technology index fell by 2.8%. Stocks related to the crypto industry were also under pressure, with MicroStrategy (MSTR), the largest corporate holder of BTC, losing 10%, and Coinbase (COIN) falling 7.7%.
The main macroeconomic factors also played a role. The PCE inflation report for February released on Friday showed a 2.5% year-on-year increase in prices, while core inflation was 2.8%, slightly higher than expected. This confirms that inflation remains a problem, and the US economy may face a slowdown. According to the Atlanta Fed's GDPNow model, the U.S. economy could contract by 2.8% in the first quarter, fueling concerns about stagflation.
An additional pressure factor was the upcoming introduction of new tariffs in the United States on April 2, which only increases investor nervousness. Recently, bitcoin has been correlating quite closely with Nasdaq, so a fall in the stock market could trigger a sell-off in the cryptocurrency sector.
But there is also an optimistic view. Some analysts believe that the current decline in bitcoin is a technical pullback related to the closing of the price gap on the Chicago Mercantile Exchange (CME). Such gaps are often filled, and a drop to $84,000 could be inevitable.
"It's still hard to say if we've reached the bottom in 2025," says LMAX Group strategist Joel Krueger. Nevertheless, he also sees positive aspects: the growing interest of traditional financial companies in cryptocurrencies and the more loyal policy of the US authorities.
Kruger believes that if the market continues to decline, the area of 70-75 thousand dollars can become a strong support. Do you think this is just a temporary pullback or the beginning of a deeper correction?