Why is the crypto market down today?

The cryptocurrency market is bleeding on Feb. 28, with the total market capitalization dropping by 6.4% to about $2.65 trillion.

Several concrete factors have contributed to the latest drop in crypto prices, including:

• Over $200 billion was wiped off the crypto market in 24 hours as US tariff wars escalated.

• Investors are risk-off amid the continued correlation between US equities and crypto assets.

• Stiff resistance at 50-weekly SMA could stifle recovery efforts.

Bitcoin leads the market slump

The crypto market sank deeper during the early Asian trading hours on Feb. 28 and US US tariffs plunged investors into a risk-off mode and boosted demand for the dollar.

Key takeaways:

• US President Donald Trump said on Feb. 27 that the proposed tariffs on Canada and Mexico will “indeed, go into effect” as scheduled on March 4. 

• Trump also emphasized that an additional 10% tariff would be imposed on China on top of the already imposed 10%.

• He also added that the April 2 “reciprocal tariff date will remain in full force and effect.” 

• In response, Bitcoin (BTC) tumbled below $80,000 for the first time since Nov. 10, dropping as much as 9.5% from a high of $86,988 on Feb. 28 to the current price of $79,400.

The decline in BTC triggered panic selling among crypto investors, with most cryptocurrencies dropping across the board.

• Ether (ETH) extended its five-day losses, dipping as low as $2,000 on Feb. 28, marking 10% losses over the last 24 hours.

• XRP (XRP), Solana (SOL) and BNB (BNB) also witnessed significant losses, down 10%, 9% and 10%, respectively. 

• Dogecoin (DOGE) and Cardano (ADA) posted the largest daily losses among the top 10 assets by market capitalization, down 11% over the last 24 hours.

• $879 million in leveraged positions were liquidated over the past 24 hours.

• Long BTC leveraged positions totaling $380.5 million have also been liquidated on the day.

• This mirrors the more than $1.25 billion long positions liquidated on Feb. 3, which accompanied a 16% drop in TOTAL—the combined market capitalization of all cryptocurrencies—with more than $570 billion being wiped off the crypto market.

• A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side. 

Risk-off mode in stocks hampers crypto market

The ongoing correction in the crypto market mirrors the weakness witnessed in US equities. 

Key points:

• The S&P 500 dropped by 1.94% to close the day at 5,861.57 on Feb. 27, while the Nasdaq composite index declined by 581 points (-2.75%). 

• The Dow Jones index clocked its second consecutive daily loss, losing 0.5% to close the trading day on Feb. 27 at 43,239.50. 

24-hour performance of US equities Source: Financial Visualizations

This highlights the growing correlation between crypto assets and US equities, where cryptocurrencies move in tandem with the stock market.

Related: When will Bitcoin price bottom?

“For 10+ years, Bitcoin was viewed as a decentralized hedge against uncertainty, but something changed,” said capital markets commentator The Kobeissi Letter in a series of X posts on Feb. 27.

The Kobeissi Letter also pointed out that the crypto markets have erased more than $800 billion since Jan. 20, despite Trump being the most pro-crypto president in history. 

“This means that at peak correlation, Bitcoin moved in line with the S&P 500 88% of the time.”

TOTAL flips 50-weekly SMA into resistance

Today’s drawdown in crypto prices has seen TOTAL—the combined market capitalization of all cryptocurrencies—lose key support provided by the 50 simple moving average (SMA) on the weekly timeframe. 

Why it matters:

• The 50-weekly at $2.58 trillion now acts as an immediate resistance on the upside, adding headwinds to the sell-off. 

• The weekly relative strength index (RSI) dropped from the positive territory at 56 last week to the current level at 42. 

• This suggests that the market conditions still favor the downside.

• Bears now target a key demand zone between $2 trillion and the $1.69 trillion range low reached during the first week of August 2024. 

• Note that both the 100-weekly and 200-weekly SMAs sit within this zone and have both acted as solid support for TOTAL since October 2023.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.