Why is the crypto market down today?

The cryptocurrency market has experienced a significant downturn today, with losses in the billions. The total crypto market capitalization dropped 9.7% over the last 24 hours to $3.07 trillion on Feb. 3, the lowest level since November 2024.While the crypto market is known for its volatility, several concrete factors have contributed to this latest dip, including:US tariffs: Trump trade wars unsettle the market.Massive liquidations erase more than $700 billion from the crypto market cap. TRUMP tariffs dampen bullish sentimentA recent executive order by US President Donald Trump has introduced tariffs that have rippled through global markets, including cryptocurrencies.What you should know:On Feb. 1, President Trump signed an executive order on Saturday imposing 25% tariffs on imports from Canada and Mexico. He also imposed a 10% tariff on Canadian energy and oil and a 10% tariff on China. The tariffs are set to take effect on Tuesday, Feb. 4. Mexico’s President Claudia Sheinbaum announced retaliatory tariffs and non-tariff measures, while Canadian PM Trudeau said Saturday night Canada would implement 25% tariffs on some American goods.Cryptocurrencies, often considered high-risk investments, are particularly sensitive to such policy shifts.The likelihood of a trade war has led to a sell-off in cryptocurrencies as investors look to mitigate risk.ETH fell 16% over the last 24 hours to $2,589, while third-place XRP was down 16.4% to trade at $2.40 at the time of writing.BNB Chain’s , Dogecoin , Cardano (ADA), Tron and other top altcoins have fallen over 10% in the last 24 hours.Over $2.25B in crypto liquidationsThe crypto market has experienced massive liquidations over the last 24 hours following US President Donald Trump’s tariffs announcement. More than $2.25 billion in crypto positions have been liquidated in the last 24 hours. Almost $1.87 billion of those are long positions.This marked one of the largest liquidation events in the history of the crypto space, surpassing the COVID-19 market crash and the FTX debacle.Over 738,000 traders were liquidated in the past day, with the largest single liquidations taking place on Binance involving ETH/BTC worth $25.6 million.This scale of liquidation exacerbates price drops and instills fear among other market participants, leading to further selling pressure. The environment of high leverage in the crypto market means that even small market movements can trigger these massive cascades of sell-offs, significantly impacting market prices. Although today’s liquidation is “one of the largest on record,” some of the historical events it is being compared to “had higher impacts,” according to NFT Museum.To put this into context, the Terra-Luna fiasco and the FTX collapse resulted in $1.6 billion in liquidations each. The COVID-19 crash saw more than $2.9 billion being liquidated across the derivatives market.Over $700B wiped off the crypto marketThe crypto market has sharply declined, losing billions in market cap, data from Cointelegraph Markets Pro and TradingView shows.TOTAL–the total market capitalization of all cryptocurrencies dropped by over 21% from a high of $3.57 trillion on Jan. 31 to an intra-day low of $2.81 trillion.This marks over a $700 billion loss over a span of four days.The crypto market is down 17% from the all-time high of $3.73T reached on Dec. 17, 2024.The crash has also seen TOTAL lose key support levels provided by the 50-day and 100-day simple moving averages (SMAs) at $3.36 trillion and $3.18 trillion, respectively.Daily RSI dropped to 33 on Feb. 3, reinforcing the intensity of the downward momentum but nearing the “oversold” threshold of 30. The bears now have their eyes set on today’s low at $2.81 trillion or the $3.18 trillion demand zone embraced by the 200-day SMA. Note that this moving average has been a dynamic support for TOTAL since Oct. 14, 2024.Bulls will try to push the crypto market cap back above the 100-day SMA, with the 50-day SMA at $3.36T being the next key level to watch.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.