Cryptocurrency markets are experiencing a significant downturn, with total market capitalization declining by nearly 4%, now under $3.6 trillion.
Leading cryptocurrencies, including Bitcoin (BTC) and various altcoins, are witnessing substantial losses. Tokens such as Virtuals Protocol, Bittensor, Neo, and Jasmycoin have plummeted over 15% in a single day.
The downturn is primarily attributed to a prevailing risk-off sentiment in the financial markets, exacerbated by upcoming tariff implementations.
The U.S. government plans to impose a 10% tariff on Chinese imports, accompanied by a 25% levy on goods from Mexico and Canada. These nations have indicated their intention to retaliate, which poses a risk of sparking a significant economic crisis.
This renewed trade conflict has triggered heightened market volatility. Major U.S. stock indices, including the Dow Jones, S&P 500, and Nasdaq 100, all fell nearly 1% in reaction to the situation. Moreover, U.S. inflation has surged to its highest level in eight months, suggesting that the Federal Reserve may refrain from cutting interest rates in the near future.
The imposition of tariffs is expected to influence inflation rates and Federal Reserve policies. Economists predict that businesses will raise prices in response to the new economic conditions. For instance, prices for vehicles from manufacturers like General Motors and Ford are anticipated to increase by 25%, along with other consumer goods such as televisions and smartphones.
Typically, cryptocurrency prices tend to decline amid significant market volatility and economic uncertainty in the United States. This tendency is amplified when the Federal Reserve adopts a hawkish stance.
Bitcoin Forms Bearish Double-Top Pattern
Bitcoin continues to decline as it has formed a high-risk double-top chart pattern, signaling potential further losses.
The cryptocurrency peaked at $108,445, with a neckline established at $88,940. This double-top pattern is recognized as a significant bearish indicator in the market.
In addition, a bearish divergence pattern is also evident, as both the Percentage Price Oscillator and the Relative Strength Index are trending downward. The PPO, which is derived from the MACD, is one of the most recognized divergence indicators.
Consequently, there is a heightened risk that Bitcoin may fall to $88,940 if it cannot maintain support at the 50-day moving average. As Bitcoin faces potential declines, other altcoins are also experiencing downward pressure.
