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While the headlines may seem alarming, this is not a time to panic. Market fluctuations, even dramatic ones, are a natural part of the financial landscape, especially in the fast-paced world of crypto. History has shown that periods of volatility can pave the way for new opportunities. By staying informed and level-headed, investors can navigate through this kind of uncertainty.
Over the weekend, the crypto market faced one of its most dramatic sell-offs in history. It is important to be aware of what happened and what would have caused this sort of market reaction.
Fears of a global trade war looming have sent shockwaves through the financial world both in traditional markets and the crypto markets. The newly elected U.S. President Donald Trump who was sworn into office no more than a month ago announced sweeping tariffs of 25%, on goods from Canada and Mexico and 10% on China, and the world has since braced for retaliation. Canada responded swiftly with matching 25% tariffs on U.S. goods, and China may follow suit.
The Australian Financial Review reported the following from Shane Oliver (AMP’s head of investment strategy)
“This is all very unsettling for investment markets,”
“Ultimately, we see Trump toning it down to avoid a long-lasting consumer and market backlash, but it could be a rough ride in investment markets until we get more certainty.”
While traditional equity markets were closed, crypto, which trades 24/7 was not and was the first to react. All the while, hedge funds and institutional players positioned themselves for Monday’s opening bell by shorting crypto as a hedge against expected equity market turmoil. This resulted in the brutal weekend sell-off that wiped billions off the market, this marks one of the largest single-day liquidations in crypto history surpassing even the collapses of March 2020 (COVID crash), FTX, and Terra Luna.
While bitcoin fell 10% and remained relatively resilient. Other coins like Ethereum, however, faced a more extreme sell-off, plummeting from $5400 AUD (Feb 1) to $4000 AUD. Other major altcoins and the general crypto market suffered similar fates, with losses ranging between 15-30%.
Many know how volatile the crypto market can be but events like this can always be a surprise. While the market remains volatile, seasoned investors know that uncertainty can produce opportunity. It is important to always look after yourself during these times and be aware that events like this have happened in the past. We at Wayex wanted to take a moment to educate our users, provide some context on why this has happened, and communicate openly with our valued community. As always—trade wisely.
— The Wayex Team
**All information in this article is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained herein shall constitute a solicitation, recommendation, endorsement, or offer by CryptoSpend to invest, buy, or sell any coins, tokens, or other crypto assets. Any descriptions of CryptoSpend products or features are merely for illustrative purposes. Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. It is essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.
