This is the worst market correction in crypto history; here’s why

Donald Trump’s win and promises may have catapulted crypto coins to new all-time highs, but they won’t sustain the market. The crypto market is under pressure, losing about 7.69% in 24 hours, down to $3.3 trillion in market cap at the start of active trading in Europe. 

On-chain data shows that the market has sunk to five-day lows as the crypto market experiences a sell-off in historically safe assets like Bitcoin and Gold, driven by hopes of easing tensions between Lebanon and Israel. Trump’s tariff threats are equally impacting stock indices and putting pressure on equities. 

On the other hand, the crypto Fear and Greed Index fell to 79. While it is still in the extreme greed range, it is the index’s lowest level in two weeks.

According to data from CoinGecko, the global crypto market cap stands at $3.31 trillion today, down 7.69% in the last 24 hours. Today, Bitcoin’s (BTC) market cap sits at $1.82 trillion, signifying a 55.15% domination. Meanwhile, stablecoins’ market cap is $199 billion, accounting for 6.01% of the total crypto market cap.

Bitcoin dipped under $93K on Tuesday morning, deepening its corrective pullback and marking a fourth straight day of decline. On Monday, a new effort to push the price past $99K resulted in increased selling pressure.

The current situation stems from a geopolitical pullback, evolving into a wider profit-taking phase, especially when analyzing the entire rally that began on November 4. Traders are closely monitoring BTC’s momentum as it approaches the $91.8K mark, which represents 76.4% of the rally. 

Without adequate support in this region, the bears may set their sights on the $87K level (61.8%).

Bitcoin and altcoins struggle at their projected peaks 

Market predictions set BTC to close the year above $100K. Now, that looks far-fetched. Bitcoin is currently trading at $91,616, a 6.6% decline in the last 24 hours. The price mark comes after a brutal day that liquidated more than $500 million of crypto longs.

Trader Skew has flagged the current levels beneath the local lows as essential for bulls to hold. He told his followers on X, “To me, the $92.5K – $92K area on BTC is very important. Now, losing that, I think the market as a whole would sell off that’s my risk price area. Above with market demand is good for alts (altcoins), below with market supply is bad for alts.”

Meanwhile, data from CoinGlass put total cross-crypto liquidations over the 24 hours to the time of writing at $689.79 million. Altcoins have shown resiliency recently, with on-chain analytics platform Santiment pinpointing the standout performers in the market.

“Traders are still riding the hot altcoins and discussing specific stories surrounding under-the-radar opportunities,” it stated on Nov. 26.

Santiment highlighted three crypto assets that have outperformed recently – The Sandbox (SAND), Stellar ($XLM), and Ethereum ($ETH).

Stellar Lumens (XLM) has surged a whopping 330% over the past fortnight to peak at $0.588 on Nov. 25, its highest price since May 2021. In addition, Santiment mentioned Ethereum’s price performance, which is “being discussed in contrast to other cryptocurrencies like Bitcoin and XRP.”

Notably, not all altcoins are doing well. Solana is down 9% today amid significant corrections across the broader crypto market. On-chain data shows SOL trading lower for the fourth day in a row at $230, failing to enter price discovery after reaching new all-time highs on Nov. 23.

Other top-cap cryptocurrencies, such as Dogecoin, XRP, and BNB, have also experienced substantial losses in the last 24 hours. Cardano experienced the most significant daily gains among the top-cap cryptocurrencies, although it dropped by 9.6% today. 

CryptoQuant independent analyst MAC_D said in response to today’s corrections that, “Bitcoin ultimately failed to break through the $100K resistance and corrected to $92.5K […] This correction occurred due to leverage overheating, as open interest and estimated leverage ratio reached annual highs.”

On November 26, Solana’s downward trend corresponds with a continuing correction in the prices of tokens built on its network. Many are experiencing substantial daily losses.

Crypto and trade wars amid Trump tariffs

According to FalconX, the relative dominance of bullish orders in the BTC market has weakened, and new buying interest is not supporting growth momentum. The entity warned that minor negative news could lead to a noticeable correction in BTC.

According to CryptoQuant calculations, Bitcoin’s unrealized gains have hit 57%, indicating an increased risk of a drop. This was preceded by a record increase in daily realized gains of $443 million.

In light of Bitcoin’s swift spike, the potential for a flash crash in the crypto market has escalated significantly, as noted by Michael van de Poppe, the founder of MN Trading. He noted traditional indicators of overheating in the market as the volume of margin positions surged alongside heightened volatility.

While the crypto market’s lows are deep, President-elect Donald Trump is also stirring fears over a potential trade war by announcing plans to implement new tariffs on key trading partners. Trump has announced a 10% tariff on all imports from China and a 25% tariff on goods coming from Mexico and Canada, with implementation scheduled for January 20. 

He argued that the measures are designed to address illegal immigration and fentanyl trafficking, describing the tariffs as essential moves to protect U.S. interests. The announcement triggered immediate pushback from China, with Liu Pengyu, a spokesperson for China’s U.S. embassy, warning, “No one will win a trade war or a tariff war.”