Crypto market capitalization has lost 18% over the past week, falling to its lowest level since the end of October at $2.75 trillion on Friday.

Support lines have been broken, and all gains since the US presidential election in November have been wiped out as a whopping $600 billion has exited the space over the past week.

The massive selloff has been a knee-jerk reaction to US President Trump’s trade tariffs. This week, he warned that 25% tariffs on Mexican and Canadian goods would take effect on March 4 and said there would be an additional 10% tax on China as well as threatening duties on the European Union.

Since trade war worries began on Jan. 20, crypto markets have erased $800 billion.

Trade Tensions

Trade tensions often create market volatility across all asset classes, including cryptocurrencies and stocks, which have also been tumbling. Crypto also takes a hit when liquidity dries up and a lot of it has gone back into the US dollar.

“The US dollar becomes the ‘safest risky asset’ during trade wars because its the most ‘stable’ currency,” explained the Kobeissi Letter.

The perceived loss of stability during trade wars worries retail, it said before adding, “As a result, we see massive daily outflows as the ‘herd’ moves together.”

Crypto markets in trade wars:

Since trade war worries began on January 20th, crypto markets have erased -$800 BILLION.

For 10+ years, Bitcoin was viewed as a decentralized HEDGE against uncertainty, but something changed.

Why is crypto falling? Let us explain.

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On Feb. 28, CoinGlass reported that more than 200,00 traders have been liquidated over the past 24 hours to the tune of $800 million. Around 86% of them were long positions and the largest single liquidation order happened on HTX with a $38 million BTC/USDT trade.

Bitcoin Down to $79K

Bitcoin plunged below $80,000 during Asian trading on Friday as the asset lost another 6% on the day. Its weekly losses were almost 19%, and it has corrected 26% from its January all-time high.

“Looking at this price action, I think we have one more violent wave down below $80k, most likely over the weekend, then crickets for a while,” observed BitMEX founder Arthur Hayes.

Ethereum has been obliterated in a fall to just over $2,100, its lowest level for more than a year. ETH has lost a whopping 9% on the day and 23% since the same time last week.

Most of the altcoins are wiping out all of their gains so far over the past few months and returning to bear market levels.

Nevertheless, zooming out shows that crypto markets, in general, have still been uptrending since the end of the bear market in October 2023 despite them falling below peak levels from the previous cycle.