What factors caused BTC to fall below the $80,000 mark?

Since Trump signed the executive order on crypto reserves on March 7, causing BTC to fall below the $90,000 mark, the crypto market has continued this sluggish trend. This morning, BTC fell below the $80,000 mark. As of press time, BTC was trading at $79,110.37, down 3.9% on the day.

So, what’s driving BTC lower? Is the current crypto bull run over?

1. The decline of US stocks led to the collapse of the crypto market

The three major U.S. stock indexes closed down again, with the Dow Jones Industrial Average down 2.08%, the Nasdaq down 4%, and the S&P 500 down 2.7%. Large technology stocks fell across the board, with Tesla down more than 15%, Nvidia down more than 5%, Apple, Meta, and Google down more than 4%, and Microsoft down more than 3%.

The decline in U.S. cryptocurrency stocks continued to expand, with all stocks falling by more than 10%. Among them: MicroStrategy (MSTR) fell 13.56%; Coinbase (COIN) fell 12.04%; Tesla (TSLA) fell 12.17%; MARA Holdings (MARA) fell 12.42%; Riot Platforms (RIOT) fell 8.48%; Robinhood Markets, Inc. (1HOOD.MI) fell 10.29%; Hut 8 Corp. (HUT) fell 12.31%.

In addition, Japanese and South Korean stock markets opened sharply lower following the decline of US stocks. The Nikkei 225 index opened down 1.1%, and the South Korean KOSPI index opened down 2.1%.

Citi downgraded U.S. stocks to neutral from overweight, while upgrading Chinese stocks to overweight, saying that American exceptionalism has at least been paused. A report from Citi strategists including Dirk Willer shows that the interruption of American exceptionalism is now more obvious; the firm has been overweight U.S. stocks since October 2023. Citi expects growth momentum in the United States to be lower than other parts of the world, but when the artificial intelligence narrative dominates again, U.S. stocks may resume outperformance. Citi said that given the strength of China's technology industry, government support for the industry and low valuations, Chinese stocks still appear attractive even after the stock market surge; "DeepSeek proves that Chinese technology is at the forefront of Western technology and even surpasses Western technology."

Currently, more and more investors on Wall Street are disappointed with Tesla. Ahead of Tesla's April delivery report and first-quarter results, UBS and Redburn Atlantic reiterated their sell ratings on Tesla due to sluggish Model Y delivery forecasts and a lack of growth catalysts in the near term. UBS cut its target price for Tesla by $24 to $225, while Redburn was more pessimistic, with a target price of $160. "We expect sales to stagnate this year without the upcoming new vehicle launches," wrote Redburn analyst Adrian Yanoshik. "So far, the sluggish new car registration data may signal ongoing demand challenges. At the same time, we expect cash flow to be affected by the new Model Y model, which began delivery in March, due to increased inventory. The United States may impose tariffs on goods imported from Mexico, adding to the cost burden." So far this year, Tesla has fallen more than 40%. If the trend fails to reverse, the stock may fall for the eighth consecutive week after the US election-induced rally, the company's longest (weekly) losing streak in 15 years.

Tesla's stock price has fallen every week since Musk joined the Trump administration as DOGE "minister". DOGE is in the midst of a broad and controversial campaign to reduce federal government spending and headcount. Tesla's market value has now been "halved" from its peak, equivalent to a loss of nearly $800 billion. Forbes data shows that Musk's wealth shrank by $22.8 billion on Monday, but he is still more than $100 billion ahead of Bezos, who ranks second on the rich list. Musk also said that the DOGE team currently has more than 100 people and may increase to 200 people.

The current trading style of the U.S. stock market is undergoing a dramatic change. Under the dual pressure of U.S. trade policy uncertainty and expectations of an economic recession, U.S. stock investors are turning to a defensive strategy: selling technology stocks and buying high-dividend dividend stocks.

2. Tariffs exacerbate economic concerns

Escalating tariff war tensions have raised concerns about the economy, offsetting U.S. President Trump's pro-cryptocurrency statement last week. Risk assets such as cryptocurrencies have come under pressure due to concerns that Trump's tariffs and government layoffs will undermine U.S. economic growth. U.S. stocks fell and U.S. Treasuries rose as investors sought safe havens. "While Trump's announcement on the strategic reserve of cryptocurrencies initially drove optimism, the rally quickly unraveled as macroeconomic conditions deteriorated and markets sold off aggressively," said Nikolay Karpenko, director of B2C2.

The German Economic Weekly website published an article by economist Desmond Rachman titled "Trump May Trigger a New European Debt Crisis". The article believes that there are signs that the new US administration is targeting Europe, especially Germany, as its next target in the trade war. European decision-makers should prepare for the trade war. The United States recently threatened to impose a 25% tariff on products exported from the European Union to the United States. However, the US government should perhaps consider the economic difficulties of the European continent: the German economy is in a downturn, while Italy and France are struggling to solve their more serious public debt problems. Perhaps by then, the US government will realize that the tariff policy - as part of the "America First" agenda - may trigger a recession in Europe and a debt crisis in the eurozone.

Trump's tariffs on Canada and Mexico will be fully implemented from April 2, and the tariffs may increase over time.

Moody's Chief Economist Mark Zandi believes that the US economy may fall into stagflation. Recent data shows that US consumers and businesses are already worried about the economic outlook and have reduced spending. The relevant effects will lead to a significant slowdown in the economy, and the tariff effect will lead to high inflation. Therefore, the US economy may fall into stagflation. If true, it will be the first time that the United States has fallen into stagflation in 50 years. The GDPNow model of the Atlanta Federal Reserve shows that the US economy may shrink by 2.8% in the first quarter. If true, it will be the first contraction since the first quarter of 2022. In the face of stagflation, the Federal Reserve may raise interest rates, just as former Federal Reserve Chairman Volcker raised interest rates sharply in the early 1980s, sacrificing the economy to curb inflation.

3. Trump’s “crypto king” halo fades

Since Trump attended the Bitcoin Conference in July last year and made a series of bold statements about the crypto industry, the market has been booming. Trump and his wife's issuance of Meme coins has had a negative impact on the market's credibility. The executive order on the strategic reserve of cryptocurrencies signed by Trump on the 7th was also within the market's expectations. Therefore, after the executive order was signed, the market fell instead. With the convening of the White House Cryptocurrency Summit, Trump did not introduce any concrete policies that would benefit the crypto market. So far, the market seems to be completely disappointed with Trump.

Nikolay Karpenko, director of B2C2, wrote that while Trump’s cryptocurrency strategic reserve announcement initially drove optimism, the rally quickly collapsed as the deteriorating macro environment triggered a massive sell-off. Solana, Cardano, and XRP fell, as Trump had mentioned that these three tokens would be listed as cryptocurrency reserves, but the final executive order did not mention them.

Pepperstone strategist Michael Brown said in a report that the biggest problem facing the market is that Trump's policies "change as often as the wind." Trump's erratic response to tariffs makes it difficult for market participants to price risks or accurately predict future policy paths. He said, "No one wants to touch dollar assets now."

4. Industry insiders’ views:

Arthur Hayes, co-founder of BitMEX, said in a post, “Here’s the plan: Be patient, don’t rush.

Bitcoin may bottom out around $70,000. A 36% drop from its all-time high of $110,000 is a normal bull market correction.

Then we need to see a sharp fall in the stock market, especially the SPX (S&P 500) and NDX (Nasdaq 100). Then the “newbies” in the traditional financial markets will be in trouble.

Subsequently, the Federal Reserve (Fed), the People's Bank of China (PBOC), the European Central Bank (ECB) and the Bank of Japan (BOJ) will all adopt loose policies in an attempt to revive their economies.

At this point, you can go all in. Traders will try to buy the dip, and if you prefer to be risk-averse, wait until central banks start easing before investing more. You may not be able to buy the exact bottom, but you won’t suffer from a long period of sideways trading and potential unrealized losses. ”

Ruslan Lienkha, YouHodler’s director of markets , said he claimed that the market is undergoing a correction that could evolve into a medium-term bearish trend. Lienkha: “Uncertainty is reaching a local peak, prompting traders to temporarily close their positions. Typically, the bond market, especially U.S. Treasuries, is a safe haven for investors during periods of heightened recession expectations.”

When asked about the viability of Bitcoin as a safe haven in the current market environment, Lienkha expressed doubts. He said: "At present, Bitcoin is definitely not a safe haven when the stock market falls. Instead, it behaves more like a high-risk technology stock with higher volatility and larger price swings. Although high volatility may lead to short-term divergences, Bitcoin's medium-term performance is likely to be consistent with the overall stock market trend."

Analysis agency Kobeissi said that the U.S. Department of Government Efficiency (DOGE) cuts in government spending are one of the reasons for the recession. They believe that U.S. government spending and job growth have been "driving" economic development, but DOGE's cost cuts will have far-reaching effects. It is not clear where BTC price trends may form a more reliable bottom.

Jeff Mei, chief operating officer of cryptocurrency exchange BTSE, said, "Bitcoin is likely to fall to the $70,000 to $80,000 range in the next few weeks. Only when the tariff war ends and the Federal Reserve resumes rate cuts will the major cryptocurrency return to its previous highs."