The broader market has now fallen more than 8% over the past week, with many coins trading in oversold territory.
From rally to sell-off in hours
Markets initially reacted positively to Trump’s comments at the World Economic Forum in Davos, where he backed crypto legislation, starting with the GENIUS stablecoin act. Bitcoin briefly surged by about $2,000, adding nearly $60 billion to the total crypto market.
However, the rally did not last. Just two hours later, Bitcoin dropped more than $3,200, triggering heavy liquidations. Around $148 million in long positions were wiped out in just 90 minutes as leveraged traders were forced out.
Why the market is falling
Analysts point to several factors behind the sudden drop:
Risk-off mood globally
Trump’s comments on possible tariffs and rising geopolitical tensions pushed investors away from risky assets. While gold moved higher, crypto followed equities lower.
Leverage-driven selling
Derivatives trading surged, with Bitcoin and Ethereum seeing large liquidations. High leverage made the market fragile, and once prices turned down, selling accelerated quickly.
Sector-specific pressure
Regulatory actions and token delistings added extra stress to parts of the market, especially smaller altcoins and privacy-focused projects.
Despite Trump’s pro-crypto stance and promises of clearer regulation, traders remain focused on short-term risk, leverage, and global uncertainty. For now, policy optimism is being outweighed by market volatility.
Until selling pressure eases and leverage resets, analysts say crypto prices could remain unstable, even as longer-term regulatory signals stay positive.
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