Investing.com– Bitcoin plummeted to a three-month low on Tuesday, as renewed global trade tensions and a major cryptocurrency exchange rattled investor confidence and triggered a broad market sell-off.
Additionally, Nasdaq futures signaled ongoing risk aversion in U.S. markets, while the Japanese yen, often sought as a safe haven during market turbulence, remained firm against the U.S. dollar and commodity-linked currencies.
As of 10:13 ET (15:14 GMT), Bitcoin fell roughly more than 7% to $87,279.0, its lowest level since mid-November.
Trump’s tariff plans rattle crypto markets
Trump has reaffirmed his intention to impose tariffs on imports from Mexico and Canada, set to take effect on March 4.
Despite ongoing negotiations and efforts by both neighboring countries to enhance border security and curb fentanyl trafficking, the administration remains steadfast in its decision. This move has introduced significant uncertainty into global markets, including the cryptocurrency sector.
Investors are concerned that the impending tariffs could disrupt trade relations and economic stability, prompting a shift away from riskier assets like cryptocurrencies.
Analysts suggest that the tariffs could lead to increased inflation and weaker economic growth, factors that traditionally impact investor confidence in volatile markets such as cryptocurrencies.
While some view Bitcoin as a hedge against economic instability, the immediate reaction indicates a cautious approach from investors amid the current uncertainty.
Nasdaq drop, stronger yen contribute to Bitcoin weakness
The crypto market downturn was also driven by a Tuesday weakness in tech stocks and a stronger Japanese yen, heightening risk aversion concerns similar to last August.
The tech-heavy Nasdaq 100 index 1.5% following the market open, extending a three-day decline.
Meanwhile, the yen strengthened to 148.82 per USD, marking the strongest level in nearly three months. The currency has climbed rapidly over the past few weeks amid rising expectations of a Bank of Japan rate hike.
The yen’s rally and BOJ speculation have sparked comparisons to last July, when similar conditions triggered a wave of risk-off sentiment, leading Bitcoin to drop sharply from around $65,000 to $50,000 within days.
Investors buying the Bitcoin dip, Kraken reportedly says
Crypto traders are taking advantage of the latest Bitcoin sell-off on Kraken, one of the ten largest cryptocurrency exchanges, as the price reaches a three-month low, Alexia Theodorou, head of derivatives at Kraken reportedly told CoinDesk.
The decline in BTC comes after a $1 billion rise in open futures positions on Binance late Monday, likely driven by traders taking short positions in anticipation of further downside.
However, buyers have stepped in on Kraken, pushing the perpetual long-short ratio to a record high of 0.8. This metric reflects the balance between buy and sell positions at any given time.
"Despite bitcoin’s price dropping below $90K, Kraken has seen a surge in traders opening long positions on its BTC perpetual markets," Theodorou reportedly said in an interview. "The long/short ratio has climbed to a record high of ~0.8, while open interest has reached a four-week high. This suggests traders could be anticipating a rebound and effectively ’buying the dip.’"
While the increase in long positions signals renewed buying interest, the long-short ratio remains below 1, indicating that short positions still outnumber longs on the exchange.
Bybit security breach further erodes market confidence
Compounding the market’s challenges, Dubai-based cryptocurrency exchange Bybit suffered a major security breach, with hackers stealing approximately $1.5 billion worth of Ethereum.
This incident stands as one of the largest in the history of digital currencies. The sophisticated phishing attack deceived Bybit executives into authorizing transfers to unauthorized wallets, leading to significant asset losses.
In response, Bybit has assured users of its solvency, securing loans to cover the losses and implementing enhanced security measures. Despite these efforts, the breach has intensified apprehensions regarding the safety of digital assets, contributing to the downward pressure on Bitcoin’s price.
Crypto price today: altcoins plunge amid broader risk-off mood
Altcoins slumped on Tuesday, in line with Bitcoin and other global markets, as investors reduced their position in speculative assets.
World no.2 crypto Ether tumbled around 11% to $2,377.70 on Tuesday.
World no. 3 crypto XRP dropped over 10% to $2.20.
Solana plunged more than 11%, and Cardano fell 10.3%, while Polygon declined 9%.
Among meme tokens, Dogecoin slipped around 11%, while $TRUMP slumped nearly 13%.