Crypto Market Takes a Big Hit

DAILY MARKET OVERVIEW

Monday Madness 😨 

👋 Hey Crypto Enthusiasts! It’s been a brutal start to the week, with Bitcoin dropping to $91,000 and Ethereum falling to $2100. If you’re feeling the pain from this downturn, you’re not alone. Markets are reacting to President Trump’s new trade tariffs, and investors are scrambling to figure out what comes next.

Why Is Crypto Dropping? Trump’s Tariffs Are the Trigger 📉

The main reason for the sell-off? Uncertainty.

On Friday, Trump announced 25% tariffs on Mexican and Canadian goods and a 10% levy on Chinese imports, effective Monday at 12:01 a.m. EST.

Investors fear this move will:

• Increase inflation by making imported goods more expensive

• Force the Federal Reserve to keep interest rates high for longer

• Hurt risk assets like crypto and tech stocks as investors move to safer assets

These concerns sent U.S. stock futures tumbling late Sunday, and because crypto trades 24/7, it was the first market to react to the panic.

The total crypto market cap lost close to 13% today but the pain doesn’t stop there. Over $2 billion in crypto positions were liquidated in the last 24 hours, meaning a wave of forced sell-offs accelerated the downturn.

"The market overreacted, and a lot of leveraged traders got wiped out," said Ryan McMillin, CIO at Merkle Tree Capital.

What Could Happen Next? Three Possible Scenarios 🤔 

This sell-off has hit hard, but it’s important to understand where things could go from here.

Scenario 1: More Downside If Inflation Rises 🔥

• If tariffs push inflation higher, the Federal Reserve might delay or even cancel rate cuts planned for later this year.

• Higher rates hurt risk assets like crypto, making it harder for Bitcoin to recover quickly.

• If stock markets react badly this week, Bitcoin could drop further toward $90K.

🔻 “If inflation spikes, crypto could be in for more pain in the coming months,” warns Nick Forster, founder of DeFi derivatives protocol Derive.

Scenario 2: A Recovery Once Panic Subsides 📊

• Some analysts believe the market overreacted and could stabilize once investors digest the news.

• Crypto has already been through worse, and Bitcoin has historically bounced back after similar panic-driven drops.

• If earnings from tech giants like Meta, Microsoft, and Tesla surprise to the upside this week, risk appetite could return.

📈 “This feels like an overreaction. Once markets adjust, we could see a strong recovery,” said BTC Markets’ Rachael Lucas.

Scenario 3: A Long-Term Bullish Case for Bitcoin 🚀

• Some analysts think Trump’s tariffs are part of a bigger plan to weaken the U.S. dollar, which could actually boost Bitcoin in the long run.

• If the dollar weakens and inflation rises, Bitcoin could regain its role as a hedge against traditional finance.

• Bernstein analysts predict Bitcoin could still hit $200K by the end of 2025.

🔍 “Bitcoin thrives when global financial uncertainty increases. We could see a major rally once the dust settles,” said Jeff Park, Head of Alpha Strategies at Bitwise.

What Should You Do Now ❔ 

It’s understandable if you’re frustrated, especially if you’ve lost money in this downturn. The key is to focus on the bigger picture and not make rash decisions based on short-term panic.

🔹 If you’re a long-term investor:

• This could be an opportunity to accumulate at lower prices if you believe in Bitcoin’s long-term potential.

• Watch how inflation data and the Fed’s decisions play out over the next few weeks.

🔹 If you’re a short-term trader:

• Volatility is likely to remain high, so trade cautiously.

• The market will be sensitive to tech earnings and economic data this week.

🔹 If you’re unsure:

• It’s okay to sit on the sidelines and wait for clearer signals.

• Market sentiment can shift quickly, and sometimes doing nothing is better than reacting emotionally.

Final Thoughts: Stay Informed, Stay Calm

This market drop hurts, but it’s not the first time crypto has been hit by macroeconomic uncertainty, and it won’t be the last. The coming weeks will be key in determining whether Bitcoin rebounds or continues lower, but history has shown that crypto has an incredible ability to recover.

THIS NEWSLETTER IS BROUGHT TO YOU BY:
OPENWALLET

Next-level security for your digital assets

Experience top security with Open Wallet. Your wallet blends user-friendliness with strong security.

SOCIAL SENTIMENT

Hyperliquid Proves Unstoppable Amid Market Carnage 😲 

The latest crypto downturn is one of the biggest sell-offs since the FTX and Luna collapses. Most altcoins have completely lost their support levels, experiencing severe liquidation events and panic selling.

However, one altcoin is standing out as a clear winner during this crash - Hyperliquid (HYPE).

Not only has HYPE held strong, but it has outperformed both Ethereum and Bitcoin, showing remarkable resilience while the broader market crumbles.

Why is HYPE Holding Up So Well?

• Because HYPE isn’t on major centralized exchanges, it isn’t exposed to market maker manipulation, which often accelerates sell-offs during volatile periods.
  

• A large portion of HYPE’s supply is locked in staking, meaning fewer tokens are readily available for panic selling.
  

• Stakers must wait 7 days to unlock their tokens, reducing impulsive liquidations and preventing supply floods during market downturns.
  

• Volatility fuels Hyperliquid’s fee mechanism, and with trading activity surging during the crash, these fees were automatically used to buy back HYPE, supporting its price.

HYPE’s ability to withstand extreme volatility while the rest of the market collapses is a clear sign of strength. As upcoming catalysts unfold, it’s positioning itself as one of the most resilient and high-potential assets of this cycle.

With unmatched stability during this market panic, HYPE is proving to be a must-watch moving forward.

NEWS OVERVIEW

The Latest Crypto Headlines 📰 

TON Now Has a $100 Million Fund to Boost Projects
TVM Ventures has launched a $100M fund to accelerate TON blockchain development, prioritizing DeFi, payments, and security infrastructure.

Monochrome Brings Aussie Crypto ETFs to Singapore
Australia’s Monochrome Group introduces Bitcoin and Ethereum ETFs in Singapore, targeting institutional investors amid growing Asian crypto adoption.

Thailand to Launch Blockchain Bond Trading Platform
Thailand’s SEC plans a digital securities platform to enhance bond trading efficiency, reducing settlement times and enabling tokenized asset issuance.

OpenAI Unveils ‘Deep Research’ ChatGPT Agent
OpenAI launches Deep Research, an AI tool for automated web research and data analysis, competing with DeepSeek in the AI-driven knowledge space.

YOUTUBE INFLUENCER SUMMARY

Summary From The Top Influencers 📷️ 

DataDash - As Predicted Bitcoin Collapsed...Here's What's Next (03.02.2025 Summary)

Nicholas Merten from DataDash explains why Bitcoin’s recent crash was predictable and what comes next. He highlights leverage-driven liquidations, weak altcoin fundamentals, and the impact of global market trends.

Bitcoin Outlook

• Bitcoin lost momentum after failing to hold the 21-day moving average, signaling weakness.

• Leverage liquidations hit a record $1.9 billion, worse than the FTX crash, as traders were overexposed.

• Exchanges benefit from liquidations, likely pushing Bitcoin toward $70,000 or lower.

• Institutional buying isn’t enough to counteract heavy sell pressure.

Altcoins Are Struggling

• Altcoins are collapsing, down 30-40%, with weak fundamentals and little investor confidence.

• Meme coins and speculative tokens are getting wiped out, showing the market is risk-off.

• No strong narratives exist, making it a bad time to bet on altcoins.

Ethereum and Solana Under Pressure

• Ethereum is down over 70% from its highs, with high fees and no real innovation holding it back.

• Solana and other major altcoins are also declining, proving no project is immune.

Macro Trends Are a Bigger Problem

• AI is disrupting tech markets, with NVIDIA stock dropping after new competition emerged.

• Big Tech is showing weakness, with Apple, Microsoft, and NVIDIA all at risk of deeper corrections.

• Global trade tensions add more uncertainty, making risk assets like Bitcoin more volatile.

• Bitcoin is not a safe-haven asset, it follows the stock market’s performance.

Final Thoughts

Nicholas expects Bitcoin to test the 200-day moving average, and warns that altcoins will continue to struggle. He advises staying on the sidelines, preserving capital, and waiting for clear signs of a market recovery before making new investments.

Now is not the time to gamble. Be patient, avoid leverage, and wait for real opportunities. 🚀

Benjamin Cowen - Bitcoin Cliff Dwellers (03.02.2025 Summary)

Benjamin Cowen discusses Bitcoin’s recent market drop and the broader implications for altcoins and quantitative tightening (QT). He explains how Bitcoin dominance is rising, altcoins are bleeding, and why the Federal Reserve’s next move is crucial.

Bitcoin Outlook

• Bitcoin’s decline was expected as it continues to follow historical cycles.

• Bitcoin dominance has surged past 63%, reinforcing the trend of altcoins underperforming.

• The next key event is the Federal Reserve ending QT, which Cowen expects could happen by March.

• Until QT ends, Bitcoin dominance can continue rising, meaning altcoins will likely keep struggling.

Altcoins Are Bleeding

• Altcoins are getting crushed against Bitcoin, with many down over 10% in a single day.

• Ethereum has officially “gone home,” touching its lower logarithmic regression trend line, which historically precedes long-term recoveries.

• Altcoin dominance has dropped to new lows, following the same pattern as past cycles.

Macro Trends and Market Impact

• The Bank of Japan’s recent rate hike triggered a market drop, similar to past instances where Ethereum capitulated a month after rate increases.

• Stock markets are also struggling, with the Nasdaq and Russell 2000 both down about 3%.

• Cowen predicts the market will force the Fed to pivot by March, which could lead to a major recovery.

• If QT continues, altcoins will keep underperforming Bitcoin, possibly hitting new cycle lows.

Final Thoughts

Cowen believes Bitcoin will remain the safest bet until the Fed pivots. Altcoins may see relief only after QT ends, which could happen in the next few months. If Bitcoin follows previous cycles, it may test lower levels before rebounding strongly.

His advice: Be patient, avoid unnecessary risk, and focus on Bitcoin until macro conditions improve. 🚀

CRYPTO MEMES

“Opening My Portfolio This Morning” 💀