Bitcoin and other altcoins like Cardano (ADA), Hedera Hashgraph (HBAR), Bonk (BONK), and Stellar Lumens (XLM) have plunged, costing investors billions of dollars. BTC plunged below the crucial support of $80,000 for the first time since March 11.
Altcoins Experience Greater Decline Than Bitcoin
Other altcoins have done much worse, with Cardano plunging to $0.58, a drop of over 55% from its December peak. This decline has wiped out over $15 billion in value as its market cap has moved to $21 billion.
Hedera Hashgraph has plummeted to $0.14, its lowest level since November 29, and 65% below its highest level this year. Bonk, the second-biggest meme coin in the Solana ecosystem, fell to $0.000098, while Stellar Lumens has slumped by 62% from its highest point in December.
The closely-watched Altcoin Season Index has moved to 14, meaning investors prefer Bitcoin.
This crash is occurring as investors shift away from risky assets such as stocks and cryptocurrencies, opting for safe havens like bonds and gold. Gold has jumped to a record high of $3,250, while the short and long-term US bond yields have plunged. Bond prices move in the opposite direction of yields.
The main reason for this crash is Donald Trump’s recently announced ‘reciprocal’ tariffs on all countries. Analysts believe that these tariffs will cause stagflation in the US. Stagflation is when an economy’s growth has stalled, and inflation has remained high.
Wall Street banks like JPMorgan, Goldman Sachs, and Bank of America have all raised their recession probability odds. This also explains why the top indices like the Dow Jones, S&P 500, and Nasdaq 100 have plunged, erasing over $5.4 trillion in value.
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Is it Safe to Buy Altcoins Like Cardano, Hedera, Bonk, and Stellar?
History suggests that such big stock and crypto market dips are good buying opportunities. Also, Warren Buffett counsels investors to buy when others are fearful and sell when others are greedy. Indeed, the Fear and Greed Index has fallen to 25, indicating significant fear in the market, while the broader index has tumbled to 4.
Stocks and crypto prices often rebound once the Fear and Greed Index plunges to the fear zone. For example, these assets embarked on a strong rally after the pandemic started in March 2020. Stocks also jumped after the Global Financial Crisis (GFC) and the dot-com bubble in the early 2000s.
There are two potential catalysts that may push altcoins like Cardano, Hedera, Bonk, and Stellar Lumens.
First, Donald Trump may decide to intervene. He may do that by announcing negotiations with some top countries, like China and the European Union. On Friday, he announced that he was talking with the leader of Vietnam, which has pledged to remove tariffs.
Second, these tokens will likely react to the Federal Reserve’s potential intervention. If the bank sees the economy moving towards a recession, it is likely to deliver interest rate cuts, which could boost risky assets.
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