Market Volatility and Price Movements

• On February 3, 2025, the cryptocurrency market saw a dramatic plunge in prices, with Bitcoin dropping from $65,000 to $58,000 within one hour. This was followed by a partial recovery to $62,000 by 11:00 AM EST. Similarly, Ethereum fell from $4,200 to $3,800 before climbing back to $4,000. These fluctuations led to a massive surge in trading volumes.
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• Other smaller tokens also declined, with some shedding between 15-23%. DOGE fell 23% to $0.2313, Solana was down 6% and XRP was down 21.60%.
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• The initial price drops triggered significant liquidations on exchanges, with over $500 million in long positions liquidated in the first hour. This event also activated many stop-loss orders, further accelerating the downward pressure.
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• However, the subsequent recovery allowed traders to capitalize on the dip, with buy orders for BTC and ETH amounting to $300 million and $200 million respectively between 10:00 AM and 11:00 AM EST.
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• Technical indicators such as the Relative Strength Index (RSI) for both Bitcoin and Ethereum dropped to oversold levels before recovering, and the Moving Average Convergence Divergence (MACD) showed bearish crossovers followed by signs of convergence, indicating a potential shift in market momentum.
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• Ether's one-day at-the-money volatility jumped to 184% from 34%.
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• Market makers, tasked with creating order book liquidity, added to the volatility by selling into weakness, accelerating the sell-off.
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• Coinbase is viewed as a top cryptocurrency stock to buy in 2025 due to potential relaxed regulations and increased institutional interest.
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‍Impact of Trump's Policies and Geopolitical Factors: A global tariff war and the imposition of additional U.S. tariffs are affecting the cryptocurrency market. A renewed trade war between the U.S. and its trading partners triggered broad-based risk aversion in financial markets, contributing to the market downturn.

‍Cryptocurrency markets plunged due as the US crypto czar David Sacks prioritized regulation in his first address to the digital asset sector.The crypto market downturn was partly triggered by President Trump’s tariffs, which led to fears of increased inflation and made it harder for central banks to lower interest rates.

The U.S. imposed additional tariffs on China.China's renewed antitrust investigations into U.S. tech companies like Google and NVIDIA caused a nosedive in the AI cryptocurrency sector.The AI crypto sector plunged 8.5%, shedding over $2.5 billion, due to the U.S.-China trade war.

The ETH/BTC ratio has dropped to 0.027, its lowest level since March 2021, as Bitcoin gains dominance. The stablecoin liquidity impulse is expanding with USDC's liquidity impulse growing by 20%, which could signal another rise in crypto prices.
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‍Regulatory Developments and Government Actions
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• The Indian government is considering a shift in its regulatory approach to cryptocurrencies.
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• Hong Kong’s SFC is increasing its cryptocurrency regulatory workforce.
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• The Union Budget (India) 2025-26 did not introduce any significant relief for crypto investors, maintaining the 30% tax on crypto gains and the 1% TDS on transactions.
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• President Donald Trump signed an executive order for the creation of a sovereign wealth fund, which might include Bitcoin.
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• The White House working group is investigating the feasibility of Bitcoin reserves.
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• Several US states are planning for Bitcoin reserves, signaling a political intent to accelerate crypto adoption.
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• Russia is reportedly using Bitcoin to evade sanctions.
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The Korea Financial Investment Association is pushing for spot crypto ETFs.
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