Crypto Markets Face Additional Pressure as Broader Risk-Off Sentiment Grows
While the crypto market had enough reasons of its own to decline, a broader shift in macro sentiment is adding further downside pressure.
The bursting of a speculative memecoin bubble in January was already a major catalyst for the sustained crypto market downturn over recent weeks. However, selling has intensified this week, driven in part by growing risk aversion in traditional financial markets.
The Nasdaq, down over 2% in late Thursday trading, has now fallen nearly 7% in just a few sessions. Leading the losses are semiconductor stocks, with Nvidia (NVDA) sliding 5% following its fourth-quarter earnings report.
Stock market valuations had been stretched after months of unchecked gains, making conditions ripe for a pullback. Adding to the pressure, President Trump’s latest tariff threats—set to impose new levies on Mexico, Canada, and China starting Tuesday—have heightened investor caution.
“Maximum caution is warranted in risk assets,” said Quinn Thompson, founder of hedge fund Lekker Capital. “Inflation data is running too hot for the Fed to cut rates anytime soon, long-term inflation expectations are rising—a major warning sign—and U.S. economic data suggests the ‘Trump bump’ was just a temporary rebound.”
When it comes to crypto, Thompson isn’t optimistic: “Every possible bullish catalyst has come and gone with little upside movement,” he said. “Investors have forgotten what a bear market looks like.” He expects Bitcoin (BTC) to drop into the $70,000s by the end of March.
