The cryptocurrency market has experienced a sharp decline, with bitcoin dropping to $82K amid macroeconomic concerns and investors shunning risky assets.
The cryptocurrency market has experienced a sharp decline over the last few hours, with bitcoin (BTC) now being down around 3% over the last 24 hours. This drop is part of a wider derisking move among traders, as investors anticipate the impact of ‘President Donald Trump’s reciprocal tariffs that are set to come into effect on April 2.’.
Macro Economic Data Fuels Risk-Off Move
The recent core Personal Consumption Expenditures (PCE) data came in hotter than expected, while consumer confidence data dipped further than expected. The index for future expectations also came in at a 12-year low, and well below levels associated with an incoming recession. This confluence of factors has seen investors reduce their exposure to risk assets and triggered a flight to safety.
Macro economic data refers to large-scale economic indicators that measure a country's overall performance.
These metrics include GDP, 'inflation rate' , 'unemployment rate' , and 'trade balance' .
They provide insights into a nation's economic growth, stability, and competitiveness.
For instance, a high GDP growth rate indicates a robust economy, while a low 'unemployment rate' suggests a strong labor market.
Macro economic data is crucial for policymakers to make informed decisions about monetary and fiscal policies.
Gold-Backed Cryptocurrencies Benefit from Risk-Off Move
However, not all cryptocurrencies are experiencing the same level of decline. ‘Gold-backed cryptocurrencies have benefitted from the risk-off move,’ as their market capitalization climbed above $1.4 billion in March. Tokens such as PAXG and XAUT are up 0.7% to over $3,100, while BTC is down 12.5% and the CD20 index 28% so far this year.
A gold-backed cryptocurrency is a digital currency that is pegged to the value of physical 'gold.'
This type of cryptocurrency aims to provide stability and security by linking its value to a tangible asset.
Gold-backed cryptocurrencies use blockchain technology to record transactions and ensure the integrity of the system.
They often offer a store of value and a hedge against inflation, similar to traditional gold investments.
Liquidations Soar Amid Market Volatility
Over the last 24 hours, over $300 million worth of long positions were liquidated on centralized cryptocurrency exchanges, while $38.8 million worth of shorts were liquidated on these platforms, according to CoinGlass data. This surge in liquidations highlights the market’s volatility and traders’ increasing risk aversion.
What’s Next for the Crypto Market?
As investors wait for the impact of ‘President Trump’s tariffs,’ the crypto market remains highly volatile. With gold-backed cryptocurrencies bucking the trend, it will be interesting to see how this plays out in the coming weeks. One thing is clear: the current market conditions are a stark reminder that macroeconomic data can have a significant impact on cryptocurrency prices.
The crypto market refers to the global network of buyers and sellers of cryptocurrencies, such as Bitcoin and Ethereum.
It is a decentralized marketplace where transactions are made without the need for intermediaries like banks.
The crypto market is highly volatile, with prices fluctuating rapidly due to factors like supply and demand, regulatory changes, and global economic events.
According to a report by Coinbase, the global crypto market capitalization reached $2 trillion in 2021, with over 18,000 cryptocurrencies in existence.
