On February 3, 2025, the cryptocurrency market faced a big crash, with Ethereum (ETH) suffering a steep fall. Ethereum’s price dropped by around 20% in just 24 hours.
It hit a low of $2,331 before slightly recovering to $2,603. This crash wasn’t limited to Ethereum – the entire crypto market saw a massive sell-off, with Bitcoin (BTC) also falling sharply.
What Caused the Crash?
The main reason for this market crash was the announcement of new tariffs by the U.S. government. These tariffs were aimed at major trading partners, including Canada, Mexico, and China.
- A 25% tariff was imposed on goods imported from Canada and Mexico.
- Canadian energy products were hit with a 10% tariff.
- Another 10% tariff on Chinese goods was set to start on February 4, 2025.
These sudden announcements sparked fears of a global trade war. Investors became nervous, and this uncertainty spread to financial markets, including cryptocurrencies.
How Did the Market React?
After the tariff news, many investors moved their money away from risky assets like cryptocurrencies. Even the stock markets reacted negatively. For example:
- Australia’s stock market dropped by 1.8%.
- The Australian dollar hit its lowest value since the pandemic.
The crypto market felt the same pressure, with significant price drops for major digital coins, including Ethereum and Bitcoin.
##Massive Liquidations in Crypto
The sharp price fall triggered liquidations of crypto investments. Over $2.2 billion worth of positions were liquidated in a single day. This was even bigger than the liquidations seen during earlier crises like FTX or LUNA.
Many traders who had expected prices to go up faced huge losses when the market went in the opposite direction.
#What Experts Are Saying
Some experts see this crash as a chance to buy assets at lower prices. Financial educator Robert Kiyosaki said these downturns could be opportunities for long-term investors. He advised people to look at the bigger economic picture and not panic during such corrections.
#What’s Next for Cryptocurrencies?
The global trade tensions caused by these tariffs have created a lot of uncertainty. It is still unclear how these policies will affect the crypto market in the coming weeks. Experts suggest that investors should be cautious and keep an eye on global events, as they can have a big impact on crypto prices.
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### Our thought:
This market crash shows how sensitive cryptocurrencies are to global events. As things unfold, staying informed and making careful decisions will be crucial for anyone involved in the crypto market.
While the current situation looks challenging, market downturns are a normal part of financial cycles, and they can also bring opportunities for the future.