The total crypto market capitalization has contracted significantly, falling to $2.7 trillion from its December 2024 peak of $3.9 trillion, representing a 30% decline in total market value over roughly four months.
This downturn coincides with broader weakness in equity markets, both reacting to President Trump's April 2 announcement of sweeping tariffs on his self-described "Liberation Day" for the United States. With these tariffs set to take effect in the coming days, market uncertainty has prompted widespread risk-off behavior among investors across multiple asset classes.
Bitcoin has demonstrated resilience amid the market turbulence. Despite dipping to $78,500, alternative cryptocurrencies face steeper declines. This divergence in performance has pushed Bitcoin's market dominance to nearly 60%, a significant increase from earlier this year.
The pattern suggests a flight to perceived quality within the crypto ecosystem, with investors favoring Bitcoin's established status during periods of heightened market stress. Other crypto assets further down the risk curve have underperformed with the news. Smaller protocol tokens, NFTs, and other high-risk assets have seen prices drop significantly from last December’s highs.
The correlation between crypto assets and traditional markets strengthened during this period of economic policy uncertainty. Investors continue to treat crypto assets as risk-on investments, reducing exposure alongside other speculative positions. Looking ahead, we’re watching to see if crypto continues to trade in tandem with equities or if Bitcoin's strength pushes crypto ahead.
This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.
