Despite a dramatic market crash that saw some cryptocurrencies plummet by as much as 95% within 24 hours, analysts are emphasizing that this decline does not indicate a long-term downturn for the crypto industry. The recent downturn appears to be driven by specific short-term factors, and many experts remain optimistic about the fundamental resilience of blockchain markets.
- •The sudden crypto market sell-off was triggered by external geopolitical and economic factors, notably U.S. tariffs on China.
- •Heavy long bias and leveraged trading amplified the volatility, leading to widespread liquidations worth billions.
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- •Experts expect the market to consolidate and prepare for a potential rebound following the rout.
The tumultuous week culminated in Friday’s market crash, with some digital assets experiencing declines of up to 95% in less than a day. The Kobeissi Letter attributes this unprecedented sell-off to a convergence of short-term factors, including heightened leverage and risk appetite, coupled with the geopolitical shock of U.S. President Donald Trump’s announcement of 100% tariffs on China. This combination created a perfect storm, especially since the announcement came at a time when market liquidity was thin, around 5 p.m. on a Friday.
The market experienced a $20 billion cascade of liquidations, forcing nearly 1.6 million traders to exit their positions within just 24 hours. This event surpassed previous crises, including the collapses of FTX and Terra/LUNA ecosystems, marking it as one of the most severe liquidations in crypto history. The total market cap of Altcoins, excluding Bitcoin and Ethereum, also plunged sharply from $1.15 trillion to roughly $766 billion — a clear indication of the shock’s severity.
Analysts advise caution but remain optimistic for long-term recovery
Crypto investors and traders should brace for further volatility in the near term as markets digest the ripple effects of the U.S. tariffs and broader macroeconomic uncertainties, according to industry experts. Cory Klippsten, CEO of Swan Bitcoin, suggests that the recent liquidation wave—though painful—will ultimately serve to eliminate over-leveraged traders and weak hands, setting the stage for a subsequent bullish rebound.
Some analysts believe that the $20 billion in liquidations, while significant, represent just a fraction of the actual financial damage inflicted across markets. The real impact could be considerably larger, with many losses yet to be fully realized as traders remain exposed to high-risk positions. Despite this short-term turbulence, overall market sentiment remains cautiously optimistic, supported by strong fundamentals and potential for future growth in the burgeoning DeFi, NFT, and blockchain sectors.
Looking ahead, market participants are banking on a technical correction and the likelihood of a trade deal easing tensions. Many experts maintain that this event is a temporary setback and that the long-term outlook for cryptocurrencies remains intact, with Bitcoin and Ethereum poised to recover and continue their upward trajectories.