The sudden breakdown erased roughly $70 billion from Bitcoin’s total market capitalization in a single session, pushing the overall crypto market cap down by more than 6% to approximately $2.3 trillion. The move marked one of the sharpest single-day pullbacks in recent weeks and underscored how macroeconomic shocks continue to influence digital asset pricing.
Tariff Policy Whiplash Sparks Risk-Off Reaction
Markets reacted sharply after fresh signals of shifting U.S. tariff policies created uncertainty around global trade and inflation. Traders described the abrupt tone change as “tariff whiplash,” a scenario where unpredictable policy direction fuels volatility across equities, commodities, and cryptocurrencies.
The S&P 500 fell nearly 1.8% during the same trading session, while the Nasdaq Composite dropped over 2%. Bitcoin, which has shown a 30-day correlation coefficient of approximately 0.62 with the Nasdaq, mirrored the downturn, reinforcing its status as a high-beta risk asset rather than a defensive hedge.
Institutional flows appear to have amplified the move. Data from derivatives markets show more than $450 million in long liquidations occurred within 24 hours, with Bitcoin accounting for nearly 60% of those forced closures. Open interest in Bitcoin futures declined by 12%, signaling rapid deleveraging.
Key Technical Breakdown Below $65K Support
From a technical perspective, the $65,000 level had acted as strong psychological and structural support throughout the month. Bitcoin had consolidated between $65,000 and $72,000 for nearly three weeks, forming a tightening range before the breakdown.
Once price action slipped below $65K, algorithmic selling intensified. Trading volume surged 38% above the 30-day daily average, indicating heavy participation in the move.
Analysts are now closely watching the $60,000 to $62,000 zone as the next significant support band. That range previously served as resistance during earlier rallies before flipping into support. If Bitcoin holds above $60K, bulls may attempt to reclaim lost ground. However, a decisive breakdown could trigger further downside toward the mid-$50,000 region.
Despite the sell-off, Bitcoin remains roughly 35% higher year-to-date, demonstrating that the broader uptrend has not been completely invalidated.
Market Sentiment and On-Chain Metrics
On-chain data suggests the correction is primarily driven by short-term traders rather than long-term investors. Approximately 78% of Bitcoin’s circulating supply remains in profit, down slightly from 84% prior to the drop.
Meanwhile, wallets holding Bitcoin for over one year have remained relatively stable, indicating long-term conviction. Exchange inflows rose 15% during the sell-off window, signaling short-term selling pressure but not yet reaching capitulation levels historically associated with market bottoms.
Broader Crypto Market Impact
Altcoins saw steeper losses than Bitcoin. Ethereum declined nearly 9%, while several mid-cap tokens fell between 12% and 18%. The total value locked (TVL) across decentralized finance platforms dipped by 4%, suggesting risk aversion across the digital asset ecosystem.
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