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The cryptocurrency market is down on March 21, with the total market capitalization dropping by 2.5% to about $2.75 trillion. 

24-hour performance of large-cap cryptocurrencies. Source: Coin360

Several factors have contributed to the latest drop in crypto prices, including:

• Over $230 million was wiped off the crypto market in 24 hours after Bitcoin failed to sustain the recent rally to $87,000.

• Investors are in risk-off mode amid the continued correlation between US equities and crypto assets.

• A classic technical setup suggests more pain ahead for crypto investors.

Bitcoin leads the market slump

The crypto market retreated on March 21 as traders booked profits following Bitcoin’s retracement from $87,000 after Trump’s speech at the  Digital Asset Summit in New York failed to meet expectations.

Key takeaways:

• US President Donald Trump delivered a video speech at the Digital Asset Summit in New York on March 20.

• In the 90-second address, Trump reiterated support for crypto but failed to announce any new policies.

• Ether (ETH) declined for the second day running, falling below $2,000 on March 20, marking 2% losses over the last 24 hours.

• XRP (XRP), Solana (SOL) and Cardano (ADA) also fell, down 4%, 4.2% and 3%, respectively. 

• The drawdown led to $235 million in leveraged positions being liquidated over the past 24 hours, with $170 million making up long positions.

Total crypto liquidations. Source: CoinGlass

• A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side. 

Risk-off sentiment pushes the crypto market down

The ongoing correction in the crypto market mirrors a similar weakness in US equities. 

Key points:

• The S&P 500 dropped by 0.22% to close the day at 5,662.89 on March 20, while the Nasdaq composite index declined by 59 points (-0.33%). 

• The Dow Jones index lost 0.02% to close the trading day on March 20 at 41,953.32.

24-hour performance of US equities Source: Financial Visualizations

“This morning, S&P 500 futures erased more than $600 billion of its market cap without any major headlines,” said capital markets commentator The Kobeissi Letter in a March 20 post on X.

Related: Here’s why Bitcoin price can’t go higher than $87.5K

The Kobeissi Letter described the latest sell-off as “flash crashes,” which are being witnessed across all risk asset classes. 

The commentator explained that it comes down to “sentiment and emotion,” adding that investor confidence has plummeted as recession fears skyrocket.

“Investors are worried about taking on more risk in this market.”

Source: The Kobeissi Letter

The Kobeissi Letter has previously pointed to the growing correlation between cryptocurrencies and other risk assets, adding that “Bitcoin has traded almost perfectly in line with the Nasdaq 100 since 2023.”

Bear flag hints at more downside

From a technical perspective, TOTAL — the combined market capitalization of all cryptocurrencies — remains in line with a bearish continuation pattern that suggests more downside is in play.

Key points:

• TOTAL is trading within a bear flag pattern, indicating the possibility of continuing with the downward momentum if key support levels don’t hold.

TOTAL/USD daily price chart. Source: Cointelegraph/TradingView

• The bear flag developed after TOTAL dropped from $3 trillion to a local low of $2.44 trillion between March 6 and  March 11.

• The consolidation within the bear flag has the price trading in an ascending parallel channel, with today’s drop testing critical support levels, including the lower boundary of the flag at $2.68 trillion.

• A breakdown of this level could trigger another drop.

• The bear flag’s downside target, derived from the height of the previous drop, is approximately $2.23 trillion, representing a 32% decline from the current price.

According to popular analyst Crypto Zone, ”the crypto market is currently in a state of fear,” with the Fear & Greed Index sitting at 27.

The analyst added:

“Total market capitalization is at $2.75 trillion, while trading volume is at $0.10 trillion. This cautious sentiment reflects the market’s overall nervousness.”

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.

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