The altcoins faced a sharp sell-off after U.S. President Donald Trump announced the first round of tariffs targeting imports from China, Canada, and Mexico. Ether (ETH), the second-largest cryptocurrency by market capitalization, led the crash, plummeting 16% in just one hour to hit $2,368 on February 3.
Although Ether has since rebounded slightly to $2,539, it remains 37% below its 2024 high of $4,078, reached in mid-December just weeks after Trump secured his presidential victory.
Altcoins in Freefall Amid Market Panic
The downturn extended beyond Ether, with leading altcoins like Avalanche (AVAX), XRP, Chainlink (LINK), and Dogecoin (DOGE) suffering losses exceeding 20% over the past 24 hours. Data from CoinMarketCap revealed that the total crypto market cap shed 8.45% to stand at $3.1 trillion.
The sudden plunge can be attributed to a combination of stop-loss triggers and fading retail interest. “Trading volumes have been declining over the past few weeks, signaling weaker conviction from investors,” noted market analyst Markus Thielen of 10x Research.
Interestingly, Thielen pointed out that although the market was aware of potential tariffs, the announcement was not fully priced in. “Investors had been fixated on the DeepSeek news, so this caught them off guard,” he explained in a February 2 report.
The market may face a prolonged period of uncertainty rather than a single shock, according to Thielen, who emphasized that much depends on how U.S. equities perform during the trading session on February 3.
The fallout was evident in the Nasdaq 100 futures, which fell nearly 2.7% following the tariff news. The S&P 500 and Dow Jones Industrial Average futures also dropped by 2% and 1.5%, respectively.
Fear Grips Market as Bitcoin Dominance Rises
The Crypto Fear & Greed Index, a key sentiment indicator, fell 16 points to a score of 44, sliding into the “Fear” zone for the first time since October 11. This decline reflects growing anxiety among market participants following the tariff-induced crash.
Bitcoin (BTC) weathered the storm better than most, declining 6.8% over the past 24 hours to $94,743. The relatively modest dip compared to altcoins drove Bitcoin’s market dominance to 62%, according to TradingView data.
Rising Bitcoin dominance typically suggests a flight to safety within the crypto market, as risk-averse traders rotate out of altcoins and into the more stable and established Bitcoin.
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