Crypto Market Loses $500 Billion in One Day Amid Economic Uncertainty
Crypto markets experienced a sharp decline, losing over $500 billion in market capitalization in just one day. The total market cap fell from approximately $3.1 trillion to around $2.6 trillion following the announcement of a new US Crypto Reserve by former President Donald Trump.
Reasons for the Decline
- Shift towards risk-off trading due to global trade tensions and economic uncertainty
- All risky assets, including stocks, oil, and crypto, retraced sharply
- Safe havens like gold continue to gain value
Bitcoin saw a decrease of roughly 3%, losing nearly $250 billion in market value within 12 hours. Ethereum dropped from a peak of $2,550 to $2,002, about 8% below its pre-announcement level. This volatility was reflected in the Crypto Fear & Greed Index, which fluctuated significantly from extreme fear to near greed before returning to low levels.
In February, crypto fund outflows reached a record $2.6 billion, exceeding previous highs. Despite bullish announcements, capital is shifting away from cryptocurrencies due to macroeconomic challenges.
Gold has risen approximately 10% this year, with forecasts suggesting further increases. Current market trends indicate that crypto is now viewed similarly to other risky assets rather than as a hedge against economic uncertainty.
At press time, Bitcoin traded at $83,594.
