Why is the crypto market down today?

The cryptocurrency market is down on March 27, with the total market capitalization dropping by 0.91% to about $2.77 trillion. At its week-to-date high, the market cap was at around $2.86 trillion.

Several factors have contributed to the latest drop in crypto prices, including:

The latest trade war escalation and its impact on broader risk sentiment.

Liquidations of overleveraged futures positions.

A prevailing bearish technical setup.

Trump tariffs return to hurt crypto sentiment

Rising global trade tensions are at the heart of the current cryptocurrency market decline.

What to know:

On March 25, the US government announced that it would impose 25% tariffs on auto imports and other goods from Canada, Mexico, and China beginning April 3.

These protectionist measures have reignited concerns of a global economic slowdown, weighing on market sentiment across asset classes.

The S&P 500, for instance, has declined by nearly 1.85% since the announcement.

Fears of renewed inflation are intensifying, as the tariffs are expected to raise consumer prices on key goods, according to St. Louis Fed President Alberto Musalem.

Higher rates are leading to lowering rate cut bets in the futures market, with odds of a 25 basis point rate decrease now down to 58% compared to 62.50% a week ago.

As a result, top cryptocurrencies like Bitcoin (BTC) and Ether (ETH), which typically trade in tandem with risk markets, are seeing heightened selling pressure.

Long liquidations overpower shorts

Almost all top cryptocurrencies have suffered larger long liquidations versus shorts in their respective markets, thus amplifying the sell-off.

Key points:

Bitcoin, which makes up over 61% of the total crypto market cap, has witnessed $62.45 million in net liquidations in the last 24 hours, out of which $48.94 million were long positions.

Similarly, Ether, the second-largest cryptocurrency by market cap, suffered over $43 million in long liquidations of a total of $51.76 million in the same period.

Overall, the total crypto market liquidations come in at $257.35 million in the last 24 hours, of which $198.11 million are longs.

Why this amplifies the sell-off:

In recent weeks, most traders entered long positions on Bitcoin, Ether, and other top cryptocurrencies, anticipating a continuation of the uptrend amid improving macro signals like Fed dovishness or ETF inflows earlier this year.

The surprise tariff announcement and renewed inflation concerns caught the market off-guard, triggering a sharp reversal in sentiment.

Related: Bitcoin price prediction markets bet BTC won’t go higher than $138K in 2025

Crypto market nearing another breakdown

Crypto markets may be gearing up for another leg down, with a classic rising wedge pattern flashing warning signs on the charts.

Key takeaways:

A rising wedge has formed on the crypto total market cap chart, a pattern that typically signals a bearish reversal, especially during downtrends.

The market cap is hovering below $2.78 trillion, with wedge support at around $2.75 trillion acting as a crucial breakdown trigger.

A confirmed breakdown from this wedge could send the total crypto market cap tumbling toward $2.54 trillion, the projected downside target based on the wedge’s height.

Volume is declining as the wedge progresses indicating weakening bullish momentum, a textbook setup for a bearish breakdown.

The 50-day EMA ($2.88T) and 200-day EMA ($2.86T) are converging above, forming a strong resistance barrier that bulls have repeatedly failed to break.

Unless bulls reclaim the EMAs with strong volume, the path of least resistance is to the downside.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.