Crypto market cap plunges 26%, erasing $1 trillion on global economic jitters

Following the announcement of the US’s reciprocal tariffs, total crypto market capitalization has dropped an estimated 25.9 per cent from January highs (around $1 trillion in value), stressing the market’s sensitivity to macroeconomic instability, said Binance in its research analysis report. It noted that the crypto market sentiment has “turned decidedly cautious,” with investors reacting in a ‘risk-off’ behaviour following Liberation Day.
The sharp market reaction highlights crypto behaviour during acute risk-off episodes, said the report. Bitcoin (BTC) dropped 19.1 per cent, with most major altcoins matching or exceeding the decline. Ethereum (ETH) dropped over 40 per cent and high-beta categories like Memecoins and Artificial Intelligence (AI) fell by more than 50 per cent.
“The broad sell-off has erased early-year gains across much of the crypto market, pushing even BTC into negative territory year-to-date as of early April — despite its strong performance in 2024,” said Binance.
Crypto assets moved along with equities, in the sense both experienced cooling demand, broad selloffs, and a slide into correction territory. As crypto markets increasingly behave like risk assets, the report warned that a prolonged trade war could weigh on capital flows and dampen demand for digital assets in the near term. This means capital that might have entered crypto will either stay on the sidelines or shift to “perceived safe havens” like gold.
Further, the report warned that a prolonged trade war could dry up retail flows, slow down institutional allocation, and curb VC funding. As such, it advised investors and crypto users to keep an eye on further trade developments like bilateral shifts, inflation readings that may lead to stagflation - a period of stagnant output alongside persistent price increases, consumer confidence around the globe, falling business activity, softening labour market, corporate earnings downgrades, and announcements of crypto-specific policies.
“A clear, distinct crypto-native driver may help the market break from its current macro-driven risk profile and reassert its idiosyncratic strength. That said, the effect can cut both ways — overhangs like unresolved litigation, stalled policy efforts, or even tighter regulatory oversight triggered by trade tensions could all weigh on sentiment,” said the report.
Published on April 9, 2025