Combining the international situation and the dynamics of the U.S. stock market from February to March 2025, the decline of the cryptocurrency market is mainly driven by the following multiple factors:
1. Macroeconomic pressure and policy uncertainty
The contradiction between the Fed’s policy and inflation: Although the core inflation in the United States has cooled slightly (the core CPI in January was 2.5% year-on-year), the Trump administration’s policy of imposing import tariffs (such as a 10% tariff on Mexican and Canadian goods) has pushed up supply chain costs, which may lead to an additional increase of 0.3-0.5% in the CPI in the second quarter, exacerbating market concerns about a rebound in inflation.
Interest rate expectations fluctuate: The probability that the Federal Reserve will keep interest rates unchanged in March is as high as 95.5%, but the market has obvious differences in expectations for subsequent interest rate cuts. Policy uncertainty has suppressed the short-term performance of risky assets (such as cryptocurrencies).
2. The collateral impact of the decline in US technology stocks
The correlation between technology stocks and the crypto market has increased: the six-month rolling correlation between Bitcoin and Nasdaq has risen to 0.5 (the highest since 2023). Technology stocks have been dragged down by the bursting of the AI industry bubble (such as the impact of DeepSeek open source model on computing power demand). The Nasdaq index fell 4% in February, causing the crypto market to be under pressure at the same time.
Crypto stocks plummeted: MicroStrategy, Coinbase and other US companies with strong correlation with cryptocurrencies generally saw their share prices fall (e.g. MicroStrategy fell 4.73%), further dampening market confidence
3. Regulatory developments and deteriorating market sentiment
Expectations of tighter regulation: Despite the Trump administration’s appointment of pro-crypto individuals to the SEC, the market is still concerned about the uncertainty of policy implementation. For example, the SEC’s increased scrutiny of crypto exchanges has led to heightened investor concerns about compliance risks.
Capital inflows plummeted: Cryptocurrency market capital inflows fell from $134 billion to $58 billion (a 56.7% drop), reflecting the cautious attitude of institutional investors amid policy and market volatility.
4. Leverage Liquidation and Market Self-Correction
Liquidation after over-leverage: The market frenzy from late 2024 to early 2025 led to high open positions in derivatives, and a large number of leveraged positions were forced to close in price fluctuations, exacerbating the decline
Bitcoin fell below key support level: Bitcoin fell from its all-time high of $108,000 to $85,000, triggering a technical sell-off, and the market value of Ethereum and Solana plummeted by 20%
5. Geopolitics and the market narrative vacuum
Trump's policy impact: The tariff policy has caused turmoil in the global supply chain. Coupled with the US economy entering a "slow growth channel" (such as non-agricultural employment data lower than expected), market risk appetite has dropped significantly
Narrative drive weakens: Traditional positive factors (such as halving cycle, ETF fund inflow) have diminishing marginal effects, while new market drivers (such as AI and encryption integration) have not yet formed a clear trend, resulting in investors’ lack of direction.
Summary and Outlook
The recent decline in the crypto market is the result of macroeconomic pressure, policy uncertainty, linkage with the U.S. stock market, and internal leverage adjustments in the market. In the short term, we need to focus on the Fed's policy path, the actual impact of Trump's tariff policy on inflation, and whether the crypto market can form a new narrative (such as the combination of AI and blockchain). In the long term, the clarification of the regulatory framework (such as the promotion of the FIT21 Act) and technological innovation (such as the diversification of stablecoins) may provide support for the market.
Investors should remain cautious, prioritize controlling leverage risk and focus on asset allocation with sound fundamentals.
BTC support levels and buying opportunities
Current price: BTC is currently priced at $82,000, which is in a critical support and resistance range.
Support levels and buying opportunities
Short-term support: $80,000 (psychological barrier). If the price retreats to the $78,000-80,000 range, it can be seen as a medium- to long-term layout opportunity (BravoResearch maintains $80,000 as an ideal buying point)
Strong support warning: Arthur Hayes pointed out that the next key support is at $77,500, and if it falls below it, it may trigger further selling
Resistance level and profit-taking strategy
Short-term resistance: $85,000 (recent oscillation upper edge), after breaking through, the target is $90,000-92,000 (technical Fibonacci retracement level)
High resistance: The order book shows that there are dense sell orders above $95,000, so beware of the risk of a fall back after a high rise
Leverage and Risk Control
Leverage recommendation: 3-5 times (balance between returns and margin call risk), avoid overnight high leverage positions
Stop loss setting: Long orders strictly stop loss at $77,500 (3% below the support level), short orders stop loss set at $86,000 (risk of callback after breaking through resistance)
Dynamic Take Profit: If the price quickly breaks through $90,000, you can partially take profit and move the stop loss up to $88,000 to lock in profits
Technical signals:
MACD: The hourly line is close to a golden cross, and the short-term rebound momentum is enhanced, but the daily line is still in the bearish area
Trading volume: A breakout above $85,000 requires a large volume (daily trading volume > $80 billion), otherwise it will be considered a false breakout
Operation summary:
Aggressive strategy: try long with a light position at current price, stop loss at $77,500, target at $90,000
Conservative strategy: Wait for the $78,000-80,000 area to build positions in batches, and look to more than $100,000 in the long term
