The cryptocurrency market faced a sharp downturn this week, with Bitcoin (BTC) plunging below $84,000 after a $115 billion sell-off erased recent gains. Ethereum’s (ETH) performance also faltered, highlighting persistent macroeconomic pressures on risk assets.
Bitcoin’s Sudden Decline
Bitcoin, which was trading near $88,000 just a day earlier, tumbled to $83,800, marking a 3.8% decline in 24 hours. The CoinDesk 20 Index saw a broader 5.7% drop, with prominent altcoins like Avalanche (AVAX), Polygon (MATIC), Near Protocol (NEAR), and Uniswap (UNI) suffering nearly 10% losses.
This market-wide rout wiped out nearly all gains from earlier in the week, underscoring the volatility of digital assets.
Ethereum Weakens Against Bitcoin
Ethereum’s ether (ETH) extended its downtrend, falling more than 6% and hitting its weakest price relative to BTC since May 2020. Spot ETH exchange-traded funds (ETFs) have failed to attract net inflows since March, while BTC-focused ETFs garnered over $1 billion in the same period, according to Farside Investors data.
The growing dominance of BTC in institutional portfolios highlights a shift in investor sentiment, further pressuring ETH’s market performance.
Macroeconomic Concerns Weigh Heavily
The crypto sell-off coincided with a sharp decline in U.S. equities, driven by poor economic data. The S&P 500 and the tech-heavy Nasdaq dropped 2% and 2.8%, respectively.
- Crypto-related stocks like MicroStrategy (MSTR) and Coinbase (COIN) suffered heavy losses, down 10% and 7.7%, respectively.
- The February PCE inflation report showed inflation at 2.8%, slightly above expectations, while minimal growth in consumer spending hinted at economic headwinds.
- The Federal Reserve of Atlanta’s GDPNow model projected a 2.8% contraction in U.S. economic growth for Q1 2025, stoking fears of stagflation.
Upcoming U.S. tariffs, dubbed “Liberation Day” by the Trump administration, added further market anxiety ahead of their implementation on April 2.
CME Gapfill or Further Decline?
Bitcoin’s recent price action aligns with its historical tendency to fill CME futures price gaps, with a gap at $84,000-$85,000 potentially explaining the drop.
While market strategist Joel Kruger of LMAX Group acknowledged the ongoing correction, he cited crypto-friendly policies in the U.S. and increased institutional adoption as positive long-term trends.
Kruger added that further declines could find strong support between $70,000-$75,000, offering hope for a recovery later in the year.
