Crypto Traders Attribute Market Drop to Trump’s Tariffs, According to Santiment
Crypto retail traders have associated the market drop with President Trump’s tariffs on China, but analysts suggest the causes are more complex.
Crypto retail traders quickly pointed to the steep decline in the broader crypto market on Friday as a result of US President Donald Trump’s announcement of a 100% tariff on China. This behavior, noted by the sentiment analytics platform Santiment, highlights a tendency among traders to find a clear reason for sudden downturns.
“This is typical ‘rationalization’ behavior from retailers, who need to point to a singular event as the reason for a cataclysmic downturn in crypto,” Santiment stated in a report on Saturday. (Translation: This is common behavior among retail investors who often look for a specific event to blame for significant drops in the crypto market.)
Despite the mentioned tariffs, analysts contend that this market drop can be attributed to more profound issues.
Analysts from the Kobeissi Letter indicated that the geopolitical event served as a catalyst but highlighted underlying factors such as excessive leverage and risk in the crypto market. The analysis revealed that about $16.7 billion in long positions were liquidated compared to only $2.5 billion in short positions, demonstrating a nearly 7-to-1 ratio favoring long positions.
Bitcoin’s price fell significantly, dropping over 10% within 24 hours and reaching as low as $102,000.
Bitcoin trading
Bitcoin is trading at $109,910 at the time of publication, down 10.06% over the past seven days. (Source: CoinMarketCap)
Santiment asserted that developments between the US and China will remain crucial in influencing crypto retail traders’ actions in the near future.
If relations between Trump and Xi become more favorable, it is expected to improve retail sentiment towards cryptocurrency. Conversely, escalating tensions could lead to a surge in bearish predictions, with Santiment warning:
“Expect for the ‘Bitcoin sub-100 K’ prediction floodgates to begin opening up.” (Translation: Prepare for an increase in negative price predictions for Bitcoin as tensions rise.)
In summary, as the crypto market reacts to external geopolitical events, traders are encouraged to stay informed and prudent.
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