Why Is the Crypto Market Down Today? Tariffs, Liquidations, and Extreme Fear Take Center Stage

The crypto market has taken a sharp downturn today due to a mix of geopolitical and market-specific factors. US President Donald Trump's announcement that his planned 25% tariffs on Canada and Mexico are on schedule, combined with widespread liquidations and a deep plunge in market sentiment, has triggered a cascading sell-off across digital assets.

• Crypto sentiment plummeted to “Extreme Fear” (a score of 25) following Trump's tariff announcement.

• Bitcoin slid to its lowest price since November, dropping below $90,000, while significant liquidations added pressure.

• Ether, along with key altcoins like Solana, Dogecoin, and XRP, witnessed steep declines and bearish technical signals.

• Broader market factors—including tech stock losses, a strengthening Japanese yen, and macroeconomic uncertainty—contributed to the sell-off.

• The overall crypto market capitalization fell nearly 8% in a single day to under $3 trillion, reflecting widespread risk aversion.

Crypto Fear and Greed Index | Source: Alternative.me

Today’s crypto market downturn is the result of multiple pressures converging at once. At the forefront, US President Donald Trump confirmed that his planned 25% tariffs on Canada and Mexico are proceeding as scheduled, reviving fears of a looming trade war. This geopolitical announcement has had a pronounced impact on investor sentiment, causing the Crypto Fear & Greed Index to nosedive from a neutral 49 to an “Extreme Fear” level of 25—a level last seen during significant market stress last September.

BTC/USDT price chart | Source: KuCoin

Bitcoin, the flagship cryptocurrency, is trading around $88,000 at the time of writing after a 7.6% decline over the past 24 hours. The uncertainty triggered by tariff news pushed Bitcoin's price lower from previous highs around $92,000—marking its lowest level since late November. This drop has been exacerbated by heavy liquidation pressures, with over $2.2 billion in Ether liquidated in recent sessions and Bitcoin futures alone accounting for more than $530 million in forced closures. The rapid unwind of leveraged positions underscores the heightened nervousness among traders amid escalating market risks.

Altcoins Under Pressure: Broader Crypto Impact

SOL/USDT price chart | Source: KuCoin

Bitcoin's downturn is just the tip of the iceberg. Major altcoins have not been spared, with Solana, Dogecoin, and XRP all experiencing significant losses. Solana, for example, plunged by 14% over the past 24 hours, while Dogecoin and XRP each fell by more than 8%. These tokens, along with other digital assets, are trading below their key 200-day moving averages—a technical sign that further underscores the market’s bearish outlook.

Investor risk aversion is being driven by more than just tariff concerns. Weakness in Nasdaq futures—down 0.3% as technology stocks continue to struggle—has added to the pressure. Meanwhile, a strengthening Japanese yen, currently trading at 149.38 per USD, is attracting safe-haven flows as market participants become increasingly cautious. This combination of declining tech equities, stronger safe-haven currencies, and trade policy uncertainty has created a perfect storm, pushing crypto investors into a risk-off mode.

Recent data showed that the Consumer Price Index (CPI) surged by 0.5% in January—above expectations—heightening concerns about inflation and prompting debates over Federal Reserve policy. Such macroeconomic pressures have spilled over into the crypto market, leading to a broader market decline where total market capitalization fell nearly 8%, from over $3.31 trillion to approximately $3.09 trillion. Even traditional US markets, like the S&P 500 and Nasdaq Composite, have trended downward, reflecting an environment of widespread economic uncertainty.

In summary, today's crypto market downturn is driven by a confluence of factors—from geopolitical tensions and aggressive tariff policies to technical breakdowns and macroeconomic headwinds. As investors face extreme fear and significant liquidation events, the prevailing sentiment suggests that market volatility is likely to remain high until clearer signals emerge from both global trade policies and economic data.