Bitcoin’s Rollercoaster Start to the Week
Bitcoin, the flagship cryptocurrency, witnessed a dramatic rebound after plunging to its lowest level since November 2024, shaking up the crypto markets at the start of the trading week. Prices dipped as low as $74,425, marking a 5.6% drop, before stabilizing around $79,000, reflecting high volatility spurred by geopolitical tensions and macroeconomic uncertainty.
The sharp downturn coincided with President Donald Trump’s aggressive tariff announcements targeting major U.S. trading partners, sparking fear across global markets. The move, viewed as protectionist and unexpected, has created widespread uncertainty, resulting in billions of dollars in market cap being wiped out across asset classes, including digital currencies.
Altcoins Follow Bitcoin’s Path, Recover from Sharp Losses
While Bitcoin attracted much of the spotlight, other major cryptocurrencies also experienced wild swings. Ethereum (ETH), Solana (SOL), XRP, and Cardano (ADA) initially plunged, with some tokens dropping over 10% during intraday trading. However, by late Monday, most had regained ground and were trading relatively flat, indicating strong investor interest and short-term recovery optimism.
The total cryptocurrency market capitalization fell briefly by 11% to $2.5 trillion, mirroring the levels recorded post-Trump’s 2024 election victory. This dramatic fall and subsequent bounceback underlined the sector’s resilience amid growing economic and regulatory tensions.
Market Chaos Across Global Assets Fuels Crypto Volatility
The cryptocurrency market did not operate in isolation. Trump’s tariff announcement acted as a macro-level shock, rattling global financial systems. Asian and European equity markets sank, and U.S. stocks experienced extreme volatility. The S&P 500 index, for instance, dropped by as much as 4.7% before rebounding by 3.4% within just one hour of trading on Monday.
Historically, Bitcoin and crypto assets have been seen as hedges against traditional financial volatility, especially in inflationary or geopolitically unstable periods. However, the recent movements suggest that digital assets remain highly correlated with high-risk tech stocks, particularly the Nasdaq 100, which also experienced significant turbulence.
Massive Liquidations Reflect Investor Sentiment Shift
According to data from Coinglass, the market’s plunge led to the liquidation of over $1.5 billion in bullish crypto positions within a 24-hour span—marking the largest single-day liquidation event of 2025. These forced sell-offs are often indicative of over-leveraged trading positions that could not sustain sudden price dips.
The liquidation wave also exposed weaknesses in investor risk strategies, with many traders placing overly optimistic bets on continued market growth following Trump’s crypto-friendly policies. The fallout has prompted calls for greater caution and more balanced exposure in volatile environments.
Options Market Signals More Downside Risk
Derivatives data show that institutional and retail investors are increasingly hedging their positions. According to Deribit, open interest in put options with a $70,000 Bitcoin strike price has surged, surpassing demand for most other strike levels. This suggests a growing expectation that prices may test lower levels in the coming weeks.
“Skew for puts is picking up considerably,” noted Sean McNulty, head of APAC derivatives at FalconX, a digital asset brokerage. “This highlights increasing demand for downside protection and reflects the market’s nervousness.”
Crypto Industry’s Strong Ties to Trump Administration
The crypto space had high hopes riding on Trump’s second term. Throughout his campaign and post-election period, Trump had expressed open support for cryptocurrency innovation and deregulation. As a result, many in the industry contributed heavily to his re-election fund, hoping to receive favorable regulatory treatment.
In return, the Biden-era regulatory crackdown on digital assets has been largely paused or overturned. Investigations into major crypto firms have slowed, and lawmakers have introduced new pro-crypto legislation. However, this week’s volatility shows that political support does not always guarantee market stability.
As Matthew Graham, CEO of Ryze Labs, aptly put it:
“Crypto came into 2025 expecting a Trump tailwind and got a Category 5 storm instead.”
Correlation With Nasdaq Persists Despite Early Divergence
Initially, cryptocurrencies showed some signs of decoupling from tech stocks, offering hope to investors seeking diversification. However, the recent swing reveals that the positive correlation between Bitcoin and the Nasdaq 100 remains strong. This means that crypto continues to act as a high-beta version of tech, rather than a distinct asset class immune to market-wide shocks.
Experts believe that for true decoupling to occur, the crypto sector needs more mainstream adoption, broader utility, and mature financial products that can cushion it from speculative flows and macroeconomic shocks.
Institutional Caution and Retail Fear Prevail
The atmosphere in the crypto market is one of caution and fear, especially among retail traders who were caught off-guard by the swiftness of Monday’s crash. Institutional players are reportedly scaling back aggressive long positions and increasing hedges, while market makers are widening spreads in response to low liquidity conditions.
This environment may persist until there’s more clarity on Trump’s trade policies, especially regarding tech imports and cross-border digital payments, both of which could significantly affect the crypto ecosystem.
What Comes Next for Bitcoin and the Broader Market
Looking forward, investors are eyeing $70,000 as the key support level for Bitcoin. If this threshold breaks, a further correction could bring the price into the mid-$60K range, which many analysts believe is a stronger area of accumulation.
Conversely, if macroeconomic fears ease or Trump offers more clarity on his crypto stance, markets could regain bullish momentum. Analysts are watching closely for any signs of reversal, on-chain metrics, or institutional accumulation patterns that could indicate renewed optimism. In the near term, volatility is expected to remain elevated, making this a crucial time for investors to rebalance portfolios, employ sound risk management strategies, and stay informed about both market movements and political developments.