Original Text Translation:

Original Text Translation:Cryptocurrency Market Faces Steep Sell-Off: Bitcoin and Ethereum Both PlungeThe cryptocurrency market experienced a significant sell-off as a new week of trading began in Asia, highlighting a clear risk-off sentiment throughout the market.Bitcoin's price plummeted sharply from Sunday evening to Monday morning Singapore time, losing approximately 7% of its value and briefly falling to a low of $77,077

Original Text Translation:

Cryptocurrency Market Faces Steep Sell-Off: Bitcoin and Ethereum Both Plunge

The cryptocurrency market experienced a significant sell-off as a new week of trading began in Asia, highlighting a clear risk-off sentiment throughout the market.

Bitcoin's price plummeted sharply from Sunday evening to Monday morning Singapore time, losing approximately 7% of its value and briefly falling to a low of $77,077. Ethereum, the second-largest cryptocurrency by market capitalization, also crashed, hitting an intraday low of $1,538a level not seen since October 2023. As of the time of this writing, Bitcoin was down 4.32% to $78,985.90, and Ethereum was down 9.27% to $1,596.37.

This decline in cryptocurrency prices coincides with U.S. President Donald Trump's aggressive pursuit of large-scale tariffs, a policy that has already wiped out trillions of dollars in U.S. stock market value. Sharp declines in U.S. stock index futures and a surge in the Japanese yen further indicate increasing turmoil in financial markets.

According to Coinglass data, approximately $745 million worth of cryptocurrency long positions were liquidated in the past 24 hours, marking the largest liquidation event in nearly six weeks.

Sean McNulty, Asia Pacific Derivatives Lead at digital asset prime broker FalconX, stated that the options market indicates selling pressure may persist, with "a significant increase in put skew." He added that key support levels for Bitcoin and Ethereum are $75,000 and $1500, respectively.

While digital assets initially showed some resilience after Trump first announced his tariff plans, suggesting a potential decoupling from tech stocks, Monday's sell-off may signal an end to that resilience.

"Macro factors are driving the market right now," said Cosmo Jiang, Partner at PanteraCapital. "The tariff-induced correction is a unique situation and not stemming from deep-seated issues with the U.S. economy. Just like this influence is artificial, this influence could disappear once the Trump administration believes it has extracted concessions from other countries."

Expanded Analysis Translation:

More Detailed Market Analysis

The cryptocurrency market's turmoil on Monday was more than just a simple price decline; it was a complex interplay of various factors. As market leaders, Bitcoin and Ethereum's sharp drops quickly spread throughout the digital asset space, causing significant losses for numerous altcoins. This chain reaction further exacerbated the market's panic, with investors selling off their cryptocurrency holdings in an attempt to mitigate risk.

The direct trigger for this sell-off was the large-scale tariff policy pursued by the U.S. President Donald Trumps administration. This policy has not only had a significant impact on the global trade landscape but has also triggered widespread concerns in the financial markets. Investors are worried that the tariff policy could lead to slower global economic growth, thereby affecting corporate profitability and investment returns. Under the cloud of this uncertainty, the attractiveness of risk assets has declined sharply, and funds have poured into safer haven assets such as the U.S. dollar, the Japanese yen, and gold.

As an emerging risk asset, the cryptocurrency market has naturally also been impacted. Although some analysts previously believed that cryptocurrencies could serve as an independent asset class, decoupled from traditional financial markets, this view has been severely challenged amid the enormous uncertainty facing the global economy. The high volatility and regulatory uncertainty of the cryptocurrency market make it more susceptible to external factors, especially when market sentiment is generally conservative.

In addition to macroeconomic factors, technical factors also played a role in fueling this sell-off. Bitcoin and Ethereum had experienced significant gains in the past, accumulating substantial profit. When negative news emerges, these profit-takers often choose to sell off to lock in profits, thereby exacerbating the price decline. Furthermore, the high leverage in the cryptocurrency market also makes price fluctuations more volatile. Many investors amplify their returns by borrowing or using leveraged trading platforms, but they also take on higher risks. When the market declines, these highly leveraged positions are more likely to be forced into liquidation, further exacerbating the selling pressure.

Large-Scale Liquidation of Long Positions

The data from Coinglass showing that approximately $745 million worth of cryptocurrency long positions were liquidated in the past 24 hours is undoubtedly an important indicator of this sell-off event. Large-scale forced liquidation indicates that there was a great deal of excessive optimism in the market, with many investors betting on the continued rise of cryptocurrency prices while ignoring the potential risks. When the market reverses, these highly leveraged positions are triggered one by one like dominoes, causing prices to fall faster.

Forced liquidation refers to the act of a trading platform forcibly closing an investor's position when the investor's account balance is insufficient to support the positions they hold. This usually happens when investors use high leverage, and when the market price moves in an unfavorable direction, their account balance decreases rapidly until it reaches the critical value for forced liquidation. Forced liquidation not only causes investors to lose all of their principal but also has a negative impact on the market, exacerbating price declines.

This large-scale forced liquidation event has also raised concerns about risk management issues in the cryptocurrency market. Many investors lack sufficient risk awareness and risk management capabilities, blindly pursuing high returns while ignoring the potential risks. Some trading platforms, in order to attract more users, have also relaxed the regulation of leveraged trading, making it easier for investors to use high leverage for trading, thereby increasing market risk.

Signals from the Options Market

FalconX's Sean McNulty pointed out that the options market indicates that selling pressure may persist, with "a significant increase in put skew." An option is a contract that gives the holder the right to buy or sell an asset at a specific price on or before a specific date. A put option gives the holder the right to sell the asset at a specific price, so when investors expect the asset price to fall, they will buy put options.

Put skew refers to the difference between the price of put options and the price of call options. When put skew rises, it indicates that investors are more willing to buy put options, reflecting their concern about the market outlook. Sean McNulty's analysis indicates that the options market is sending a warning signal, with investors generally expecting cryptocurrency prices to fall further.

In addition, he added that key support levels for Bitcoin and Ethereum are $75,000 and $1500, respectively. A support level refers to a level where the buying pressure increases during a price decline, thereby preventing the price from continuing to fall. If the price falls below the support level, it means that the buying pressure is insufficient to prevent the price from falling, and the market may decline further.

The End of Decoupling of Cryptocurrencies and Tech Stocks?

While digital assets initially showed some resilience after Trump first announced his tariff plans, suggesting a potential decoupling from tech stocks, Monday's sell-off may signal an end to that resilience.

The cryptocurrency market has long been considered closely related to tech stocks. Many investors regard cryptocurrencies as a high-risk, high-return technology investment and include them in their technology stock portfolios. However, in recent years, some analysts have begun to believe that cryptocurrencies can serve as an independent asset class, decoupled from traditional financial markets. They believe that the decentralized nature of cryptocurrencies, limited supply, and potential for global application give them unique value that can withstand the shocks of traditional financial markets.

But Monday's sell-off shows that the cryptocurrency market is still difficult to completely decouple from traditional financial markets. In the face of enormous uncertainty in the global economy, investors still regard cryptocurrencies as a risk asset and sell them off along with tech stocks. This shows that the cryptocurrency market still needs to undergo more development and maturity to truly become an independent asset class.

Domination of Macro Factors

PanteraCapital's Cosmo Jiang said: "Macro factors are driving the market right now. The tariff-induced correction is a unique situation and not stemming from deep-seated issues with the U.S. economy. Just like this influence is artificial, this influence could disappear once the Trump administration believes it has extracted concessions from other countries."

Cosmo Jiang's view emphasizes the impact of macroeconomic factors on the cryptocurrency market. He believes that this sell-off is not stemming from inherent problems in the cryptocurrency market itself but is driven by external macroeconomic factors. The tariff policy has triggered a correction that is a special case, and once this impact is eliminated, the market may return to stability.

However, it is worth noting that the impact of macroeconomic factors on the cryptocurrency market is long-term and not just a short-term shock. Global economic growth, inflation levels, interest rate policies, and geopolitical risks will all affect the direction of the cryptocurrency market. Therefore, investors need to pay close attention to changes in the macroeconomic situation in order to better grasp the investment opportunities in the cryptocurrency market.

In conclusion, the steep sell-off in the cryptocurrency market on Monday was the result of a combination of factors, including the impact of macroeconomic factors and the promotion of technical factors. Investors need to fully understand these factors in order to better assess market risks and make informed investment decisions.