Crypto Market’s Decline: Major Reasons Behind the Crash

The cryptocurrency market has taken a heavy hit, with the combined market capitalization of major assets like Bitcoin (BTC) and Ethereum (ETH) shedding over $500 billion since Friday, February 3

The cryptocurrency market has experienced a steep sell-off, shedding over $500 billion in total market capitalization since Friday, February 3. This downturn marks one of the sharpest sell-offs in recent months, with over $2.1 billion liquidated in just 24 hours—surpassing even the losses seen during the FTX collapse and the COVID-19 crash.

As the market faces massive deleveraging, Bitcoin has experienced a more than 10% decline in the past two weeks, while Ethereum has plunged over 30%. However, both cryptocurrencies are now facing critical support levels that could determine the next market move.

Crypto Market’s Decline: Major Reasons Behind the Crash

The ongoing downturn in the cryptocurrency market has been influenced by a series of factors, chief among them being President Donald Trump’s trade wars. After months of anticipation surrounding his second term in office, the sell-the-event scenario has unfolded, with investors reacting negatively to Trump’s new tariff policies targeting Canada, Mexico, and China. The trade wars have led to retaliation from these countries, creating widespread economic uncertainty and triggering a chain reaction in both traditional stock markets and the cryptocurrency sector. As a result, Bitcoin and Ethereum have seen a steep decline, mirroring the broader market sell-offs.

Ethereum Faces Massive Whales’ Capitulation

Ethereum has been particularly hard-hit, with a significant capitulation event unfolding among Ethereum whales. The surge in Ethereum’s supply on centralized exchanges has reached a new 12-month peak of 16.2 million ETH, signaling that large investors have been offloading their positions en masse over the past 24 hours. This panic selling among whales has further intensified the decline in Ethereum’s price, which is now testing critical support levels.

Ethereum’s Critical Support Level and What Comes Next

As Ethereum struggles to maintain its position, the price is currently retesting a crucial support zone, a level that must hold to avoid further losses. Crypto analysts are keeping a close eye on $2,750, which has emerged as a critical threshold for Ethereum.

If Ethereum manages to hold above this level, it could set the stage for a potential bullish rally in the coming months, with analysts like Ali Martinez forecasting that Ethereum could see a move beyond $6,000 if the support holds.

Meanwhile, Benjamin Cowen, another well-known crypto analyst, believes that Ethereum’s price, particularly against Bitcoin and the US dollar, is likely to hit a bottom after the Federal Reserve’s Quantitative Tightening (QT) cycle ends. This suggests that Ethereum could stabilize and eventually reverse its trend once broader market conditions improve.

Bitcoin Faces Significant Support Challenges

Similarly, Bitcoin’s price has also faced substantial losses, dipping below $91,000 and testing critical support levels. Bitcoin’s $91k mark has proven to be a key level of support in recent weeks, but the cryptocurrency is struggling to maintain this as it faces considerable selling pressure. Bitcoin’s fall below $100,000 in the past two weeks has led to a sharp increase in trading volume, signaling that market sentiment is heavily negative.

As the crypto market continues to digest the effects of President Trump’s new tariff policies and broader economic uncertainty, traders are left wondering when the market might regain its footing. With the massive sell-off and rising liquidation events, all eyes are on the $91k level for Bitcoin and the $2,750 support zone for Ethereum.

The coming weeks will likely determine whether these support levels can hold and whether the market can reverse course toward a new bull run or if further correction lies ahead.