Chart Analysis: After the huge shock of Trump's tariff policy, where exactly is the bottom of the crypto market?

Original title: Tariffs and Turmoil

Original authors: UkuriaOC, CryptoVizArt, Glassnode

Compiled by: Daisy, ChainCatcher

The Trump administration announced the “Liberation Day” tariff policy, leading to severe fluctuations in the financial markets, with major macro indices generally declining, and the digital asset market also not spared, experiencing a comprehensive downturn.

Summary

• News of U.S. tariffs has severely disrupted major global financial markets, with several markets experiencing one of their worst trading days since March 2020.
• The inflow of digital assets has almost come to a standstill, with liquidity significantly contracting, bringing strong downward pressure.
• However, based on the price trends of Bitcoin and Ethereum, as the prices decline, the scale of losses and exits is gradually diminishing, which may indicate that the selling pressure in the market is approaching exhaustion in the short term.
• The decline of the entire digital asset market is widespread. The market capitalization of altcoins has dropped from $1 trillion in December 2024 to the current $583 billion.
• A comprehensive analysis of on-chain and technical models shows that in order to regain upward momentum, Bitcoin must reclaim the $93,000 level. The range of $65,000 to $71,000 below is a key support level that bulls must defend.

The market is broadly down.

The Trump administration announced the “Liberation Day” tariff policy, triggering severe fluctuations in the financial markets, with major stock indices generally falling. The U.S. policy stance has shifted towards promoting a weaker dollar, lower interest rates, falling oil prices, and a contraction in fiscal spending. These combined factors could lead to a significant slowdown in the U.S. economy and trigger a substantial contraction in overall liquidity.

The uncertainty brought by tariffs has become the fuse for the market’s “risk aversion” sentiment to heat up, triggering a large-scale sell-off, with several major financial indices recording their worst performance since March 2020.

Source: Yahoo Finance

The digital asset market is particularly sensitive to changes in global liquidity, and it has not been spared in this round of declines, with many cryptocurrency prices experiencing double-digit drops.

The price of Bitcoin, as the dominant asset, fell from $83,500 to $74,500, resulting in a market cap evaporation of about $150 billion.

As the second largest cryptocurrency, Ethereum has seen a more severe drop, with its price falling from $1,800 to $1,380, resulting in a market cap decrease of about $40 billion.

Since the beginning of the year, the net inflow of funds into the two major mainstream crypto assets has significantly decreased. This trend is mainly reflected in the changes in the 30-day “realized market capitalization,” an indicator that measures the changes in monthly net capital flows of the assets.

• The monthly capital inflow peak of Bitcoin once reached $100 billion, but has now shrunk to about $6 billion;
• The monthly inflow peak for Ethereum was $15.5 billion, which has now turned into a net outflow of $6 billion.

The inflow of funds into the Bitcoin network is gradually stagnating, indicating a lack of new incremental funds to support higher prices. The outflow of funds from Ethereum is mainly due to ETH bought at high levels being spent at low levels, resulting in capital losses. This also indicates that Ethereum is currently facing greater resistance compared to Bitcoin, and its market performance is relatively weaker.

If we take the FTX collapse at the end of 2022 as a starting point to observe the overall changes in the “realized market capitalization” of Bitcoin and Ethereum, we can quantify the scale of capital that these two assets have absorbed since the low point of this cycle.

• The realized market value of Bitcoin increased from $402 billion to $870 billion, an increase of $468 billion, a growth rate of 117%;
• The realized market value of Ethereum increased from $183 billion to $244 billion, an increase of $61 billion, or 32%.

The disparity in inflows between the two partially explains the divergence in the performance of the two asset markets since 2023. Ethereum has attracted significantly less capital and new demand than Bitcoin in this cycle, resulting in a relatively weak price increase and failure to reach new highs, while Bitcoin has already crossed the $100,000 mark in December 2024.

! [Chart Analysis: After Trump’s Tariff Shock, Where Is the Bottom of the Crypto Market?] ](https://img.gateio.im/social/moments-aff1c394ccad6403131a4773fbdc1177)

The MVRV ratio is used to measure the relationship between the spot price and the realized price, reflecting the average unrealized profit or loss of each asset holder. When the MVRV ratio is above 1, it indicates an average state of unrealized profit; when it is below 1, it indicates a state of unrealized loss.

Since the start of this bull market in January 2023, the MVRV ratio of Bitcoin and Ethereum has shown a significant divergence again. Bitcoin investors have consistently held a higher level of unrealized profit, while Ethereum’s MVRV ratio fell below 1.0 again in March this year, indicating that most holders have entered the loss zone.

By calculating the difference between the MVRV ratios of Bitcoin and Ethereum, we can identify whether, on average, Bitcoin holders’ unrealized gains outperform or underperform those of Ethereum holders during certain periods.

• The current spread indicates that Bitcoin investors have an average unrealized gain higher than Ethereum investors;
• A negative difference indicates that Ethereum investors have a stronger average profitability.

As mentioned earlier, since the start of this bull market, the average profit level for Bitcoin investors has been higher than that of Ethereum investors.

As of now, this trend has lasted for 812 days, setting a record for the longest duration ever recorded.

It can be seen that Ethereum’s performance in this round is relatively weak, mainly due to the inflow scale of funds and investment demand being significantly smaller than that of Bitcoin. The differentiation trend between the two can be further reflected through the ETH/BTC price ratio.

Since the “Merge” upgrade in September 2022, the ETH/BTC exchange rate has significantly dropped from 0.080 to the current 0.0196, a decline of 75%. This is the lowest level for this trading pair since January 2020, with only 500 days out of 3531 trading days having a ratio lower than the current level.

Furthermore, in the current bull market, there has been almost no phase where Ethereum consistently outperforms Bitcoin, which is extremely rare in past bull markets. This further indicates that the market structure in this cycle has significantly deviated from the historical patterns and performance that investors are familiar with.

Review of Loss Situation

After experiencing a significant drop like this week’s, it is particularly important to examine investor reactions, especially in the context where bear markets are often triggered by rising panic and massive losses.

By assessing the realized losses within a 6-hour rolling window, we can better understand the behavior and emotional responses of market participants during the current downtrend.

The “surrender-style sell-off” event of Bitcoin investors was significant, with a peak loss of up to $240 million within a certain 6-hour window, making it one of the largest loss events in this cycle.

However, as the price dips each time, the scale of realized losses is gradually shrinking, indicating that there may be signs of short-term selling pressure exhaustion in the current price range.

Ethereum also exhibited a similar behavior pattern, with a single realized loss peak of up to $564 million during this round of decline, making it one of the largest sell-off events since the bull market began in January 2023.

As prices gradually decline, the realized losses of Bitcoin and Ethereum are both weakening, which may indicate that investors are gradually adapting to the lower price range and the current turbulent market environment.

! [Chart Analysis: After Trump’s Tariff Shock, Where Is the Bottom of the Crypto Market?] ](https://img.gateio.im/social/moments-c9b3ebdfbb0319f2d7e7e63411625bed)

Market-wide contraction

The ongoing tightening of market liquidity has led to a significant devaluation of the entire altcoin sector. Assets further out on the risk curve are particularly sensitive to liquidity shocks, often accompanied by more severe price pullbacks.

As of December 2024, the overall altcoin market capitalization (excluding Bitcoin, Ethereum, and stablecoins) peaked at $1 trillion in the current cycle. Since then, the market capitalization has retraced sharply and has now fallen to $583 billion, a decline of more than 40% in just a few months.

It is worth noting that in this round of correction, the various sub-sectors of altcoins have not shown significant differentiation in their performance. The overall decline has been widespread, with all sub-sectors experiencing substantial devaluation, and even Bitcoin has recorded negative returns in the past three months.

interval analysis

Finally, we will assess the market’s reaction to key technical indicators and on-chain cost ranges. These reference tools help investors make judgments and decisions in a volatile and uncertain market environment.

Technical analysis has long been an important tool for investors, and Bitcoin investors typically focus on a set of key moving averages. Among them, the 111-day, 200-day, and 365-day moving averages (111DMA, 200DMA, 365DMA) are commonly used indicators for measuring Bitcoin market momentum.

Refer to the following technical framework for analysis:

• The first drop of Bitcoin below the 111-day moving average (93,000 USD) marks a significant blow to market momentum, and there has not been an effective rebound attempt since then.
• After the first decline, the price oscillated around the 200-day moving average ($87,000), which is considered by most technical analysts to be the dividing line between long and short. The market showed significant hesitation in this range, which eventually led to another downside and a new round of price declines.
• Recently, the price has fallen below the 365-day moving average ($76,000) for the first time since the 2021 cycle. This key momentum support level has not yet been completely lost; if it cannot maintain stability, it may trigger further downward trends.

In the bullish market uptrend phase, short-term holders (STH) are usually the group that bears the main losses during market panic sell-offs. Their behavioral and emotional changes can serve as important reference indicators for assessing the intensity of market corrections and how investors respond.

The Short-Term Holder (STH) cost benchmark has historically been seen as a key reference level for judging market momentum during bull markets. A 1 standard deviation interval ± constructed around this cost benchmark is typically used as the upper and lower edges of local price fluctuations.

• Short-term holder cost basis +1σ: $131,000
• Short-term holder cost basis: $93,000
• Short-term holder cost basis -1σ: $72,000

Bitcoin has fallen below the short-term holder cost basis (STH-CB) for the first time, indicating that market momentum is beginning to weaken (it also fell below the 111-day moving average). Subsequently, the price rebounded below this cost line and faced resistance, confirming a shift in investor sentiment.

Currently, the spot price of Bitcoin has stabilized between the STH cost benchmark and one standard deviation below it, forming the upper and lower boundaries of the current trading range, which is $93,000 to $72,000.

Active Realized Price and True Market Mean are another set of price models, typically located near the midpoint of the Bitcoin cycle. These two models estimate the cost basis of active market participants by excluding lost or long-dormant supply.

From a statistical perspective, spot prices fluctuate above or below these two models on about 50% of trading days, making them important references for mean reversion and also useful for delineating the boundary of market states between bull and bear markets.

• Active Realized Price: $71,000
• True Market Mean: $65,000

The consensus among multiple on-chain price models indicates that the $65,000 to $71,000 range is a key area for bulls to establish long-term support. If the price effectively breaks below this range, it will mean that the vast majority of active investors are in a state of unrealized loss, and overall market sentiment may be significantly impacted as a result.

Conclusion

Due to the increasing uncertainty of U.S. tariff policies, pressure on global financial markets continues to rise. This weak trend has spread to almost all asset classes, as evidenced by the significant pullback in major macro indices.

The digital asset market has also been affected, with a comprehensive contraction observed across various sub-sectors. Bitcoin’s price briefly dipped to $75,000, marking one of the largest pullbacks since the bull market began in January 2023. Ethereum’s decline is even more severe, with many long-tail crypto assets currently deep in a bear market trend.

Combining various on-chain and technical price model analyses, the $65,000 to $71,000 range is seen as a key area for bulls to rebuild long-term support. If the Bitcoin price falls below this range, market sentiment may suffer a significant blow, as the vast majority of active investors will be in a state of unrealized losses.