Bitcoin and most altcoins pulled back this week, while the crypto fear and greed index slipped into the fear zone.
Ethereum (ETH) dropped to a low of $2,100, down by over 47% from its highest level this year. Similarly, Dogecoin (DOGE) price slipped to $0.2060, its lowest level since Nov. 4, while Ripple (XRP) fell to $1.8010, down by 47% from the year-to-date high.
Other altcoins, including as Solana, Polkadot, and Chainlink, also suffered double-digit losses on Monday. However, most of them pared back some losses and are now approaching their weekly opening levels.
The total cryptocurrency market cap, tracked by CoinMarketCap, initially dropped to $3 trillion on Monday before recovering to $3.3 trillion by Friday.
The broader crypto market retreated this week amid growing concerns over a potential trade war between the United States and its key trading partners, including China, Mexico, and Canada. Former U.S. President Donald Trump announced a 25% tariff on goods imported from Mexico and Canada and a 10% tariff on Chinese imports.
He then paused tariffs on Canadian and Mexican goods for 30 days pending negotiations, while tariffs on Chinese imports remain in place. A prolonged trade war between these countries and European nations could trigger a risk-off sentiment, weighing on riskier assets like cryptocurrencies.
Bitcoin and Ethereum ETFs had weak demand
Bitcoin and these altcoins pulled back as demand from institutional investors remained weak. Spot Bitcoin and Ethereum had net outflows this week, while MicroStrategy paused Bitcoin purchases last week. The company had acquired Bitcoins for twelve straight weeks, bringing its total holdings to 471,000 coins.
Altcoins, including Ethereum, DOGE, XRP, and SOL, also dropped as investor sentiment weakened. The closely watched fear and greed index fell to 35, its lowest level since October last year. Historically, cryptocurrencies tend to decline when fear dominates the market.
These losses occurred as the altcoin season index continued to decline, while Bitcoin held steady. The index dropped to 33, down from its year-to-date high of 47, indicating stronger demand for Bitcoin compared to altcoins.
A potential bullish catalyst for altcoins is the formation of a hammer candlestick pattern on the weekly chart. This pattern, characterized by a long lower shadow and a small body, is a well-known bullish reversal signal.
Additionally, Bitcoin has formed a bullish flag pattern on the weekly chart, which could indicate a potential rebound.
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