The cryptocurrency market is experiencing a period of heightened volatility, defying traditional patterns and leaving traders perplexed. Despite positive developments, such as pro-crypto moves from the US government and President Donald Trump's election win, the market has continued to retrace, according to pseudonymous crypto trader Sykodelic. Bitcoin's dominance has reached 61.40%, surpassing analyst Benjamin Cowen's prediction of 60% before an altcoin season would begin. This unexpected trend has led to confusion among traders who anticipated a shift towards altcoins following Trump's inauguration.
The Crypto Fear & Greed Index, a measure of market sentiment, dropped to "Neutral" on February 5, indicating a significant decline from the previous day's "Greed" score. This volatility can be attributed to macroeconomic events, such as the escalating trade war concerns triggered by Trump's new tariffs on Canada, Mexico, and China. On February 3, the crypto market experienced the "largest liquidation event in history," with over $2.24 billion liquidated within 24 hours, according to CoinGlass data. Despite Trump's subsequent pause on the tariffs, Bitcoin continues to trade below the psychological $100,000 price level, currently hovering around $97,925.
Despite the US government's efforts to foster a "golden age for crypto," traders remain cautious, expecting the market to be peaked. The recent volatility highlights the importance of considering macroeconomic factors in market predictions, as historical performance alone may not provide an accurate picture of future trends.