Cryptocurrency prices suffered a big dive this week costing investors billions of dollars. Bitcoin has retreated below $80,000, while the total market cap of all these coins plunged by 5.40% to $2.64 trillion. This means that crypto investors have lost almost $1 trillion in the past few months.
Why Jasmy, Solana, Shiba Inu, Pepe, and altcoins crashed
Most altcoins have suffered a big reversal this week. Jasmy price dropped to a low of $0.0170, its lowest level since November 5 and 72% below the highest level in November last year.
Similarly, the Solana price dived to $127, down from almost $300 a few months ago. Shiba Inu price tumbled to $0.00001337, down sharply from $0.00003326, while Pepe coin fell to $0.0000075.
There are three main reasons why Bitcoin and these altcoins plunged: falling fear and greed index, technicals, and Donald Trump’s tariffs and impact on inflation.
Fear and greed index has dropped
The first main reason why altcoins like Jasmy, Solana, Shiba Inu, and Pepe have plummeted is that investors have increasingly become more fearful in the market today.
A look at the CBOE S&P 500 index, commonly known as VIX, shows that it has jumped in the past seven consecutive days and remained above $20. A high VIX index is usually a sign that the market is more volatile.
The CNN Money fear and greed index has moved to the extreme fear zone of 18. This drop happened as many subindices dropped to the extreme levels.
For example, the market momentum, stock price strength, put and call options, and safe haven demand have moved to the extreme fear zone. The other subindices like the junk bond demand and market volatility have moved to the fear zone. The crypto fear and greed index has also continued falling this month.
Crypto prices crash when investors are fearful because it leads to increased panic selling and low demand as investors stay in the sidelines.
Bitcoin price double-top
Altcoin prices have crashed after Bitcoin price formed a double-top pattern at $108,200. As shown below, this double-top had a neckline at $89,100, where the coin crashed below this week. Bitcoin has also plunged below the 200-day moving average.
Therefore, there are odds that the BTC price will crash to $73,614, the highest level in March last year. That crash would be bullish because it will signal that it has formed a break and retest pattern, a popular reversal sign. Most altcoins crash whenever Bitcoin is not doing well as is happening today.
Donald Trump tariff and the Federal Reserve
Altcoins like Shiba Inu, Pepe, Solana, and Jasmy prices are falling after Donald Trump insisted that his tariff proposals would go on in March. He has suggested numerous tariffs. From a country perspective, he has placed tariffs on Canadian and Mexican goods. He has also hinted that the country will have reciprocal tariffs and a 25% one on steel and aluminum.
These tariffs will brng the country to a stagflation, a situation where an economic slowdown is accompanied by high inflation. Stagflation has no easy solution since each Federal Reserve activity has an unintended consequence.
High interest rates to slow inflation will often lead to a slow economic growth, while low rates will lead to higher inflation. Now, analysts expect that the Fed will cut rates to boost the economy and prevent a recession.
Crypto prices usually drop when there are these uncertainties. This explains why American stocks like IVV, SPY, and VOO ETFs have crashed recently.
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