Written by: 1912212.eth, Foresight News
In the early morning of April 7, after several days of consolidation and volatility, the crypto market experienced a significant downturn. Bitcoin dropped from $82,000 to a low of $77,000, Ethereum fell from $1,800 to around $1,500. SOL also dropped above $100, with many Altcoins experiencing substantial declines. Tokens such as SUI/BERA/ENA/AAVE saw 24-hour drops exceeding 11%.
According to liquidation data from Coinglass, over 288,000 people were liquidated in the past 24 hours, with a total liquidation amount of $891 million. Long positions were liquidated for $758 million, with the largest single liquidation on CEX occurring on Binance, valued at $16.38 million. On-chain, the "63,410 ETH whale" position was also liquidated due to the rapid price drop, resulting in a loss of $79.59 million.
However, some whales continued to buy the dips during Ethereum's decline. Lookonchain data shows that a whale purchased 5,227 ETH at an average price of $1,578. Additionally, the whale address 7 Siblings continued to buy ETH over the past 10+ hours, spending $42.66 million USDC to purchase 25,102 ETH at an average price of $1,700. They hold over 660,000 ETH (approximately $1.037 billion) and have borrowed $412 million from multiple lending protocols using ETH as collateral. These lending positions remain healthy, with liquidation prices below $1,100.
With the market in bloodshed and market sentiment just recovering from neutral, the panic index has once again plummeted to extreme fear. What happened?
US Stocks Plummet Under Tariff Clouds
Tariff clouds overshadow global markets, with US stock futures opening sharply lower and panic index futures surging.
US stock futures pared losses, with S&P 500 futures now down less than 3% (previously down 5.4%), and Nasdaq 100 futures now down less than 4% (previously down 6.2%). VIX futures soared 34.4%. US Treasury yields fell, with 10-year Treasury yields dropping 10 basis points. After-hours, Apple fell 5.5%, Tesla dropped 10%, and NVIDIA declined 9%. The Nikkei 225 and Topix indices both fell over 5%, with futures temporarily halting after hitting limit down. Spot gold returned above $3,040 per ounce, having previously touched $2,971.28.
On Sunday, Trump's senior economic officials dismissed investor concerns about inflation and recession, insisting that prosperity is imminent despite global tariff-induced market turbulence. Officials, including Treasury Secretary Besent and Commerce Secretary Lutnick, stated that Trump would maintain his tariff agenda. Lutnick mentioned tariffs are coming, while Besent said he sees no reason to price in an economic recession.
Trump suggested that the stock market might need to "take medicine".
Goldman Sachs' latest report shows they've lowered the US Q4 2025 GDP growth forecast to 0.5% and increased the 12-month recession probability from 35% to 45%. This is due to rapidly tightening financial conditions, foreign consumer boycotts, and continuously rising policy uncertainty, which could suppress capital expenditure more than previously assumed.
The crypto market is now closely linked to macro markets, especially US stock trends. When macro markets face a crisis, liquid risk assets tend to follow market fluctuations.
Rate Cut Uncertainty Remains
Recession fears intensify, and market expectations for Fed rate cuts rise, betting on five rate cuts this year. US federal funds futures suggest the Fed will cut rates by 120 basis points. JPMorgan Chase strategists led by Jay Barry predict the Fed will decide on rate cuts at every FOMC monetary policy meeting until January 2026, expecting the top of the federal funds rate target range to drop to 3.0% by early next year.
On April 4, Trump called on Powell that now is the best time for rate cuts. However, Fed Chair Powell stated that "weak economic growth and rising inflation offset each other, maintaining the expectation of two rate cuts in 2025. The Fed has not estimated the probability of an economic recession, but external forecast institutions have increased this possibility. Tariff levels are higher than almost all predictions, but it's still unclear where they will ultimately land. Our recent progress towards the 2% inflation target has slowed, and we are prepared to wait for more definitive information before considering adjusting our policy stance. It's too early to say what the appropriate path of monetary policy is. There will be significant fiscal legislation and regulatory changes, and many businesses are waiting for clear guidance to make decisions."
Someone vividly commented, "Trump said he performed surgery boldly on the patient, but after leaving the operating table, he found that head nurse Powell refused to give the patient a blood transfusion."
According to CME's "Fed Watch", the probability of a 25 basis point rate cut in May is 33.3%, while the probability of maintaining the current rate is 66.7%.
The Fed's reluctance to cut rates has led to increasingly pessimistic market sentiment and intensifying sell-offs.
Market Outlook
After the crypto market downturn, market sentiment is extremely pessimistic. However, BTC has not yet fallen below the March 11 low of $76,606.
Top trader Eugene Ng Ah Sio posted on his personal channel that this downturn is an unprecedented turbulent situation for both the crypto market and the entire stock market. He vaguely feels that if handled properly, this storm might create wealth that could change one's fate. But for now, survival is key.
Arthur Hayes posted on social media that a significant portion of Trump's supporters do not hold substantial financial assets. The schadenfreude between non-shareholders and shareholders is quite strong—which is why Trump dares to be tough on tariffs, believing his core supporters will back him. He also mentioned that if the bond volatility index breaks 140, it will force the Fed to "open the floodgates".
After the MEME market cooled down, mainstream Altcoin valuations have significantly declined. During this violent correction, investors generally feel the pain. Perhaps after the Fed starts cutting rates, some truly valuable project protocols will gain favor in a rational market.
