5 Factors Behind the Trillion-Dollar Crisis of Wall Street and Cryptocurrency
On March 10, 2025, the US stock market and cryptocurrency markets simultaneously plunged, wiping out more than $1.75 trillion from Wall Street and causing massive losses in the crypto economy. The turmoil was caused by policy uncertainties, investor outflows, and shocks from external factors. Let's analyze the 5 main factors behind this crisis.
Unstable economic policies
President Donald Trump's tariff policies on imports from Canada, Mexico, and China have raised concerns about a global trade war. In addition, Trump's refusal to rule out the possibility of an economic recession caused the Dow to fall 2.3%, the S&P 500 to fall 3.1%, and the Nasdaq Composite to lose 4.3%. This was one of the worst days for the US stock market since 2022.
Disappointment with the US Strategic Crypto Reserve
The March 6, 2025 executive order establishing the US Strategic Crypto Reserve disappointed as it excluded immediate purchases of bitcoin, leading to a 4% drop in the price of Bitcoin. Over $650 million in crypto liquidations occurred within 24 hours, pushing the Crypto Fear and Greed Index down to 20, indicating extreme investor anxiety.
Crypto Investment Outflows
Crypto investment products recorded $876 million in outflows in the week ending March 7. In total, $4.75 billion has left the market over the past four weeks. Assets under management fell to $142 billion, reflecting a shift in investor risk appetite. Bitcoin alone lost $756 million in inflows for the week.
Bybit Hack Fallout
The Bybit hack on February 21, 2025, which was attributed to North Korean hackers, cost the cryptocurrency market $1.46 billion. The incident further sowed uncertainty and eroded confidence in cryptocurrency exchanges, leading to a wave of sell-offs and urgent borrowing needs to replenish reserves.
Market volatility and concerns
Trump’s policies and recession-related rhetoric amplified market volatility. Tesla shares fell 14%, while the S&P 500 tech sector fell 4.2%. The S&P 500 officially fell into negative territory for the first time in four days, marking a four-day losing streak.
Still watching and waiting.
The market turmoil has highlighted the complex interplay between global policy factors, investor sentiment, and cybersecurity threats. Both traditional and crypto markets have reacted strongly to geopolitical upheavals, leaving many questions about the path forward.
