The crypto market continues its strong downward trend as the fear and greed index slumped following Donald Trump’s “Liberation Day” speech.
Bitcoin (BTC) crashed by 3.5% in the last 24 hours as it approached the crucial support at $80,000. Similarly, Ethereum (ETH) price dropped to $1,765, while Ripple (XRP) fell below the key support at $2.
The total market capitalization of all cryptocurrencies declined by 4% to $2.6 trillion, meaning investors have lost over $1 trillion in recent months.
Crypto prices plunged as the stock market also imploded. Thirty minutes after the opening bell, the Nasdaq index was down nearly 4.7%, the S&P 500 index was down 3.78% and the Dow Jones Industrial was down 3.4%.
These assets dropped after Trump delivered his Liberation Day tariffs that was harsher than expected. He imposed a minimum tariff of 10%, with China and the European Union’s tariffs being 34% and 24%. Trump has also imposed a 25% tariff on steel, aluminium, and parts.
Therefore, there is a risk that these tariffs will trigger a recession in the US and other countries. Polymarket odds of a US recession in 2025 rose to a record high, while a TS Lombard analyst said:
“The imposition of tariffs is not a mild stagflationary event, this is a recession-producing turn — if these tariffs stay in place.”
BTC, ETH, and XRP prices to depend on Federal Reserve
Historically, risky assets like cryptocurrencies and stocks plunge immediately following black swan events.
Stocks dropped sharply at the onset of the Global Financial Crisis in 2008. Similarly, both stocks and crypto fell in March 2020 when the World Health Organization declared COVID-19 a global pandemic.
In both cases, the market began to recover only after the Federal Reserve intervened. The stock market experienced a decade-long rally after the 2008 crisis, while both stocks and crypto rebounded strongly after the Fed slashed interest rates in March 2020.
In this case, however, the Fed may decide to accelerate its interest rate cuts if it sees the US veering into a recession. Also, Donald Trump may decide to offer bailouts to key sectors like agriculture, leading to more money supply and higher asset prices.
Therefore, while BTC, ETH, XRP, and other altcoins may continue to fall in the short term, a rebound cannot be ruled out if the Federal Reserve steps in.
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