Cryptocurrency prices suffered a big reversal during the American session leading to a $1 billion liquidation among investors. Bitcoin plunged below $85,000, while popular coins like Cardano (ADA), Official Trump (TRUMP), Dogwifhat (WIF), and Virtuals Protocol (VIRTUAL) falling by over 20%.
Crypto crash amid strategic reserves and summit news
These cryptocurrency prices crashed in a week that they should be doing well because of the recent news from the United States.
Donald Trump announced his plans for the strategic crypto reserves that will feature blue-chip coins like Bitcoin and Ethereum. Other Made in USA coins like XRP, Solana, and Cardano will also be included.
They have also crashed ahead of the first ever cryptocurrency summit scheduled on Friday this week. This summit will feature some of the biggest players in the crypto industry, including executives from exchanges like Gemini, Coinbase, and Uniswap.
In theory, all these should be good news for Bitcoin and other altcoins. The main reason for the crash in relation to this is that investors see an uphill task for Trump to create these reserves this year.
The US president is different from other countries like China and Russia in that he does not have all the power. Instead, major decisions must be ratified in the House of Representatives and Senate.
While Donald Trump’s Republican Party controls the two houses, passing a sensitive motion on crypto in the two houses will be hard. That’s because many representatives are opposed to these coins.
Therefore, there is a likelihood that the US government will not have these crypto reserves this year. If it happens, chances are that it will involve just Bitcoin, which some legislators may stomach.
Crashing fear and greed index
Bitcoin and altcoins like Cardano, Trump coin, Dogwifhat, and Virtuals have crashed because of the elevated fear in the market. The fear and greed index crashed to the extreme fear of 24, while the crypto index has moved to 25.
This increased fear explains why blue-chip US indices like the S&P 500, Nasdaq 100, and Dow Jones have crashed in the past few days. The tech-heavy Nasdaq 100 index fell by 2.65% on Monday, while the Dow Jones and S&P 500 fell by 1.48% and 1.76%.
This fear has happened because of Donald Trump’s decision to impose tariffs on top trading partners like Canada and Mexico. He has also unveiled general tariffs on goods like steel and aluminium.
Trump’s claimed goal is to force these countries to help the US with immigration and drug issues. However, his real goal is to attract investments in the United States and reduce trade deficits.
Bitcoin and other cryptocurrencies crashed because of the impact of these tariffs. They will lead to higher inflation in the US, and push the Fed to leave rates higher for longer.
Crypto traders in the sidelines
Cardano and other altcoins like Trump coin, WIF, and Virtuals Protocol have crashed as investors remain largely in the sidelines. One of the potential reasons for this is that Bitcoin, which often dictates the price action in the crypto industry, has formed a double-top chart pattern, pointing to further downside ahead.
All these factors have pushed many crypto investors to panic-sell and others to stay in the sidelines. A good example of this is in the ETF market where spot Bitcoin and Ethereum ETFs have shed assets in the past few days.
Additionally, there is the concept of buying the rumor and selling the news. This is a situation where most cryptocurrencies like Bitcoin and Cardano surged after Trump’s victory and then retreated after his inauguration.
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