The cryptocurrency market experienced a sudden crash on Friday, resulting in dramatic price drops of up to 95% for certain cryptocurrencies within a 24-hour period. However, analysts from The Kobeissi Letter have assessed that this event doesn’t predict a long-term bearish trend or imply a decline in the market’s fundamentals.

This unexpected downturn, labeled by the analysts as a ‘perfect storm,’ was attributed to several short-term factors, including “excessive leverage and risk.” Notably, President Donald Trump announced 100% tariffs on China, which exacerbated market conditions. Analysts reported that $16.7 billion in long positions were liquidated compared to only $2.5 billion in short positions, indicating a skewed market dynamic.

Market Crash Source: The Kobeissi Letter

Furthermore, this announcement came around 5 PM when market liquidity was already low, making conditions ripe for volatility. The analysts noted:

“We believe this crash was due to the combination of multiple sudden technical factors. It does not have long-term fundamental implications. A technical correction was overdue; we think a trade deal will be reached, and crypto remains strong. We are bullish.”

The market downturn led to a massive $20 billion in liquidations, impacting nearly 1.6 million traders in just one day, surpassing previous crises such as the collapses of FTX and Terra/LUNA.

Market Cap Drop The Total3 crypto market cap dropped from $1.15 trillion to about $766 billion in a day (Source: TradingView)

Analysts, including Cory Klippsten, anticipate that investors and traders should brace for ongoing price fluctuations in the near term as the market reacts to the implications of President Trump’s tariff announcements. He asserted that the market correction would purge leveraged traders, setting the stage for a future rally.

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