(Bloomberg) — Cryptocurrencies experienced a downturn as concerns regarding a selloff in US equities overshadowed President Donald Trump’s recent attempts to support the sector.
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Bitcoin dropped over 3% on Tuesday morning in Asia, while the second-largest cryptocurrency, Ether, fell by as much as 6% to $1,756, marking an intra-day low not registered since October 2023, according to Bloomberg data. Both cryptocurrencies later recovered some of their losses.
The initial downturn was triggered by a selloff in US equities, particularly in technology stocks. The tech-focused Nasdaq 100 Index plummeted by 3.8%, recording its steepest decline since October 2022. Wall Street is on edge following Trump’s warning that Americans may experience a “slight disturbance” due to trade tensions with Canada, Mexico, and China. Analysts and economists on Wall Street have been increasing their predictions for a potential US economic downturn.
“With the industry now having its strategic Bitcoin reserve executive order, crypto lacks one less positive catalyst to consider, leaving it vulnerable to broader market risk appetites,” commented Joshua Lim, Co-Head of Markets at FalconX Global.
Trump has ordered the establishment of a US Bitcoin reserve and an additional stockpile of other cryptocurrencies prior to a major crypto summit with industry leaders in Washington on March 7 — widely anticipated actions that ultimately had minimal impact on market sentiment. The directive empowered the Treasury and Commerce departments to devise “budget-neutral strategies” for acquiring more Bitcoin, implying that the government will not be purchasing additional crypto for the reserve.
Hayden Hughes, who heads crypto investments at family office Evergreen Growth, stated, “The market seems to be reacting negatively to the reserve announcement. However, I believe this reaction is exaggerated, and the market currently appears to be significantly oversold.”
Among the hardest-hit assets in Monday’s market downturn were exchange-traded funds aimed at providing enhanced returns on digital assets or crypto-related themes. Two ETFs designed for leveraged bets on Strategy — the Bitcoin-holding entity previously known as MicroStrategy — saw declines of over 30% for the day.
As of 10:52 a.m. on Tuesday in Singapore, Bitcoin was trading at $79,300. According to Hughes, the primary digital asset is likely to find support at $73,000 and $70,000. “There will be significant buying interest at those levels,” he noted.
