The crypto market is facing a historic downturn, reminiscent of the 2020 Covid crash. Bitcoin has fallen below $80,000, while Ethereum trades near its two-year lows at under $1,500. This recent bloodbath presents significant concerns for traders and investors alike. Here are three key factors contributing to this market volatility: 
Trade Wars Impact Market Sentiment
President Trump’s new tariffs on goods from China, India, and Europe have sent shockwaves through both the stock market and the crypto world. These hefty tariffs (20%-34%) add to pre-existing economic uncertainty, prompting significant sell-offs in both stocks and crypto.
The trade tensions create supply chain disruptions, fueling anxieties about global growth. Trillions of dollars vanished from U.S. equities as investors sought safety, further accelerating the crypto sell-off. Crypto markets are particularly vulnerable during times of market volatility, often experiencing sharp declines when traditional financial markets experience a downturn. 
Crypto Liquidations Exacerbate Volatility
A staggering $1.3 billion worth of crypto was liquidated in just one day, pushing prices down considerably.
Traders who borrowed funds to purchase cryptocurrency found themselves forced into selling when prices crashed. This resulted in Ethereum’s slide to below $1,450, and Bitcoin falling below $77,000. 
The domino effect of these liquidations contributed to the overall downward pressure on crypto markets.
Fear of Recession Spurs Market Uncertainty
Global fears surrounding a potential recession are also playing a role in this market downturn. The combination of ongoing trade disputes and sluggish economic performance has led many investors to withdraw from riskier assets, such as cryptocurrencies.
The stock markets in Japan and South Korea have also been hit hard by these fears. This widespread sell-off across all major cryptocurrencies (Bitcoin, Ethereum, XRP, Solana, Dogecoin) demonstrates the interconnected nature of global markets.