The crypto market has suffered a major meltdown with liquidations jumping and the valuation of all tokens plunging by over $300 billion. So, will Bitcoin and other altcoins go back up?
Why the Crypto Market Crash is Happening?
The crypto market is crashing after the renewed trade war between the two biggest economies globally. Trump has announced fresh 130% tariff on Chinese goods, a number that will keep rising in the coming days as China retaliates.
The new trade war led to a sense of fear among investors, which pushed the Fear and Greed Index much lower. Also, the Altcoin Season Index plunged to 36 as top coins like MYX, Story, and dYdX plunged.
Cryptocurrencies have also plunged amid profit-taking among investors after Bitcoin surged to a record high. It is common for Bitcoin to pull back after hitting its all-time high.
Will Crypto Go Back Up Soon?
Therefore, the question among most investors is whether the crypto market will go back up as the current crash and liquidations accelerate.
It is normal for cryptocurrencies and stocks to plunge when there is a major crisis such as the new trade war. This crash happens as investors panic-sell these assets.
The crypto market crash may continue in the near term as China responds to US measures and Trump countermeasures. As happened in April, chances are that the tariffs will jump from the current 130% to over 150%.
On the positive side, crypto prices often rebound after the panic period ends. For example, Bitcoin price plunged after Donald Trump’s Liberation Day in April and then surged to a record high a month later.
Similarly, top cryptocurrencies like Ethereum and XRP have jumped to their record highs months after the Liberation Day tariffs. Also, cryptocurrencies surged after crashing hard at the onsight of the pandemic.
A rebound will likely be triggered by the announcement off talks between the two countries or an eventual deal. The other potential catalyst is that the Federal Reserve may decide to accelerate its interest rate cuts to cushion the economy.
