Image Credit: Bloomberg

Cryptocurrencies dropped as concerns over a selloff in US stocks overshadowed President Donald Trump’s recent initiatives to support the industry. Bitcoin fell over 3% on Tuesday morning in Asia, while Ether dropped as much as 6%, hitting an intra-day low of $1,756, the lowest since October 2023, according to Bloomberg data. Both coins later regained some of their losses.

The initial declines followed a sharp selloff in US equities, led by tech stocks. The Nasdaq 100 Index dropped 3.8%, marking its worst day since October 2022. Wall Street is growing increasingly concerned after Trump warned that trade wars with Canada, Mexico, and China could cause "a little disturbance" for Americans. Economists and strategists are also raising their expectations for a potential US economic slowdown.

Joshua Lim, Co-Head of Markets at FalconX Global, said that with the announcement of the Bitcoin reserve executive order, the crypto industry now lacks a key positive catalyst, leaving it vulnerable to broader macroeconomic risks.

Trump had ordered the creation of a US Bitcoin reserve and a separate stockpile for other cryptocurrencies ahead of a high-profile crypto summit on March 7. However, the announcement did little to boost market sentiment. The order instructed the Treasury and Commerce departments to develop “budget-neutral strategies” for acquiring Bitcoin, meaning the government will not be buying additional crypto for the reserve.

Hayden Hughes, head of crypto investments at Evergreen Growth, noted that the market seems to be overreacting to the reserve announcement. He believes that the market is "deeply oversold" at this point.

Among the hardest-hit assets were exchange-traded funds (ETFs) designed to offer amplified returns on digital assets or crypto-linked themes. Two ETFs that leveraged bets on Strategy, the Bitcoin-holding company formerly known as MicroStrategy, saw their values fall by more than 30%.

Bitcoin was trading at $79,300 as of 10:52 a.m. on Tuesday in Singapore. According to Hughes, the largest cryptocurrency is likely to find support at the $73,000 and $70,000 levels, where strong buying is expected.

Paraphrasing text from "Bloomberg"all rights reserved by the original author