The cryptocurrency market plunged sharply on Thursday, with Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) leading the losses, as fear swept across global financial markets following Donald Trump’s aggressive “Liberation Day” tariff announcement.
The sell-off mirrors a broader market downturn that hit equities and crypto alike, raising concerns about a looming recession and the Federal Reserve’s potential response.
Crypto Market Loses Over $1 Trillion
Bitcoin fell 3.5% in the last 24 hours, trading just above a crucial $80,000 support level. Ethereum slipped 6.4% to $1,765, while XRP saw the steepest decline, tumbling over 8% and breaking below the critical $2 mark. The total market capitalization of all cryptocurrencies dropped by 4% to $2.6 trillion — signaling that investors have lost more than $1 trillion in recent months.
The broader Fear and Greed Index also took a hit, reflecting mounting investor anxiety and declining risk appetite across both crypto and equity markets.
Stock Market Collapse Mirrors Crypto Slump
The turmoil wasn’t limited to digital assets. U.S. stock indices saw sharp losses within the first 30 minutes of trading. The Nasdaq dropped nearly 4.7%, the S&P 500 was down 3.78%, and the Dow Jones Industrial Average fell 3.4%, intensifying fears of systemic market stress.
The crash came on the heels of Trump’s surprise tariff announcement — a minimum 10% tariff on imports, with 34% tariffs on Chinese goods, 24% on EU imports, and 25% on steel, aluminum, and parts. The harsher-than-expected measures have sparked concerns of a global trade war and possible economic recession.
“The imposition of tariffs is not a mild stagflationary event — this is a recession-producing turn,” noted a TS Lombard analyst.
Recession Risks Rise
Market odds of a U.S. recession in 2025 surged to a record high on Polymarket, echoing similar sentiments across Wall Street. Analysts warn that if these tariffs remain in place, the impact could cascade across global supply chains, corporate earnings, and consumer prices.
Fed’s Response May Be Pivotal
Historically, risk assets like crypto and equities have responded sharply to major macroeconomic shocks. During the 2008 financial crisis and March 2020 pandemic, markets only stabilized after intervention from the Federal Reserve, including interest rate cuts and liquidity support.
There’s growing speculation that the Fed may accelerate its rate cuts if signs of recession intensify. Additionally, Trump could move to bail out key sectors like agriculture, increasing money supply and potentially supporting a rebound in asset prices.
Long-Term Outlook: Crisis or Opportunity?
While short-term losses may continue, some analysts see long-term potential. A historical pattern has shown that recessions often lay the foundation for wealth creation.
“More wealth is created during recessions than any other time,” noted financial educator Kelly (@SelfMadeMastery) on X.
Investors and institutions alike may soon view the current downturn as a buying opportunity, especially if the Federal Reserve intervenes or macroeconomic conditions stabilize.
For now, all eyes remain on the Fed, Trump’s next move, and how markets both traditional and digital react in the days ahead.
