Cryptocurrencies tumbled as a sharp selloff in US equities overshadowed recent efforts by President Donald Trump to bolster the digital asset industry.
Bitcoin dropped more than 3% on Tuesday morning in Asia, while Ether, the second-largest cryptocurrency, plummeted as much as 6% to an intra-day low of $1,756, a level not seen since October 2023, according to Bloomberg data. Both tokens later pared some of their losses.
The decline followed a rout in US stocks, with technology shares leading the downturn. The Nasdaq 100 Index plunged 3.8%, marking its worst day since October 2022, as investors grappled with mounting economic concerns. Wall Street remains on edge after Trump cautioned that Americans could experience a “little disturbance” due to trade tensions with Canada, Mexico, and China.
Strategists and economists across financial markets have been increasing their forecasts for a potential US economic downturn, further dampening investor sentiment.
“Now that the industry has its strategic Bitcoin reserve executive order, crypto has one fewer positive forward catalyst to price in, and we’re left at the mercy of macro risk appetites,” said Joshua Lim, Co-Head of Markets at FalconX Global.
Trump had previously ordered the establishment of a US Bitcoin reserve and a separate stockpile of other cryptocurrencies ahead of a high-profile crypto summit with industry leaders in Washington on March 7. However, these initiatives have so far failed to provide lasting support to the market. The order directed the Treasury and Commerce departments to develop “budget-neutral strategies” for acquiring Bitcoin, meaning no immediate government purchases were planned.
Hayden Hughes, head of crypto investments at Evergreen Growth, noted that market participants seemed to be reacting negatively to the reserve announcement. “But in my estimation, this is really an exaggeration, and the market now appears deeply oversold,” he said.
Among the hardest-hit assets in Monday’s broad selloff were exchange-traded funds (ETFs) designed to amplify returns on digital assets and crypto-related themes. Two ETFs that make leveraged bets on Strategy, the Bitcoin-holding company formerly known as MicroStrategy, plunged more than 30% in a single day.
As of 10:52 a.m. in Singapore on Tuesday, Bitcoin was trading at $79,300. According to Hughes, the largest digital asset is expected to find strong support at $73,000 and $70,000, potentially drawing in buyers at those levels.
