Cryptocurrency prices are crashing, with the total market capitalization of all coins falling by nearly 4% to under $3.6 trillion.
Bitcoin (BTC) and most altcoins were in the red, with tokens like Virtuals Protocol, Bittensor, Neo, and Jasmycoin being the top laggards. All these tokens crashed by over 15% on Sunday.
The main reason why Bitcoin and other altcoins are crashing is the ongoing risk-off sentiment in the financial market amid the tariff risks.
President Donald Trump will implement a 10% tariff on Chinese imports and a 25% levy on Mexican and Canadian goods. The three countries have pledged to retaliate on these tariffs, risking a substantial economic crisis.
The new trade war has led to a big market volatility increase. U.S. benchmark equity indices ended lower Friday as markets analyzed the latest reading of the Federal Reserve’s preferred inflation metric as well as the looming tariff threat.
The Dow Jones, S&P 500, and Nasdaq 100 indices all dropped by almost 1%. And U.S. inflation increased by the most in eight months, suggesting the Federal Reserve would probably not cut interest rates any time soon.
In addition to the market volatility, these tariffs will impact inflation and the Federal Reserve. Economists anticipate that companies will increase prices to deal with the change in price. As such, General Motors and Ford vehicles brought from Mexico will see a 25% increase. The same is true with other items like televisions and smartphones.
Cryptocurrency prices drop when there is substantial volatility and economic risks in the United States. They also fall when the Fed is highly hawkish.
Bitcoin price double-top pattern formation
Further, Bitcoin and other altcoins are in the red after the former formed a high-risk chart pattern, pointing to further downside.
It has formed a double-top pattern at $108,445, and its neckline is at $88,940. A double-top is one of the most popular bearish patterns in the market.
Bitcoin has also formed a bearish divergence chart pattern as the Percentage Price Oscillator and the Relative Strength Index have continued falling. The PPO indicator is derived from the MACD, one of the most popular divergence patterns in the market.
Therefore, there is a risk that Bitcoin will drop to $88,940, especially if it loses the 50-day moving average support. As such, altcoins are falling as Bitcoin crash risks rise.
