The cryptocurrency markets faced significant turbulence on March 4 as geopolitical headlines and profit-taking pressures triggered sharp corrections across major digital assets. Asian trading sessions revealed a bearish tone, with Bitcoin leading the downturn and erasing recent gains. Despite optimistic developments, including high-profile endorsements and strategic policy proposals, investor sentiment turned cautious amid escalating macroeconomic concerns.
Bitcoin Drops 13% Amid Tariff Fears and Weak ETF Inflows
Bitcoin fell sharply by 13% during Tuesday’s early Asian trading hours, dragging the total crypto market capitalization down by approximately $125 billion. The drop wiped out all weekend gains and signaled renewed risk aversion among institutional and retail investors alike.
According to data from Fairside.co.uk, Bitcoin ETFs saw minimal inflows—only $3.8 million on Monday—indicating weak demand despite the asset’s previous rally. Market analysts attribute the sudden sell-off to former U.S. President Donald Trump’s proposed new tariffs, which sparked fears of broader financial market instability. The announcement triggered over $1.1 billion in liquidations within 24 hours, disproportionately affecting long positions across leveraged trading platforms.
While some investors had hoped that Trump’s suggestion to include Bitcoin in a proposed U.S. cryptocurrency strategic reserve would bolster confidence, the market reacted instead to the potential economic fallout from protectionist trade policies. With volatility surging, short-term traders are now focusing on key support levels near $56,000, while macro watchers monitor U.S. inflation data and Fed commentary for clues about future capital flows into digital assets.
Dogecoin Struggles Despite Musk Support: Price Prediction and Liquidation Warnings
Dogecoin (DOGE) continued its downward trajectory, trading around $0.19 on Tuesday after a nearly 17% decline the previous day. Despite ongoing public support from Elon Musk—who has repeatedly endorsed DOGE as a viable payment currency—the coin remains under intense selling pressure.
Over the past 24 hours, more than $20 million in leveraged long positions were liquidated, adding to over $100 million in total DOGE-related liquidations in the past week. This reflects growing fatigue among retail traders who had hoped for a breakout following social media hype.
Technical indicators paint a bearish picture. The price has broken below key moving averages, and the funding rate for DOGE perpetual contracts has turned negative—suggesting that shorts now dominate the market. Multi-timeframe analysis shows strong resistance at $0.23, with immediate support at $0.17. A break below this level could accelerate losses toward $0.14, aligning with the 61.8% Fibonacci retracement of its last major rally.
Market depth charts also reveal concentrated sell walls between $0.20 and $0.22, reinforcing the view that upward momentum is likely to be capped in the near term.
Why Is Dogecoin Underperforming?
While meme coins often rely heavily on sentiment and celebrity influence, DOGE’s fundamentals lack the ecosystem development seen in other altcoins. Unlike Ethereum or Solana, it doesn’t support smart contracts at scale or host decentralized applications (dApps). As investor focus shifts toward utility-driven blockchains, DOGE may continue to lag without structural upgrades or real-world adoption catalysts.
Ethereum Faces Profit-Taking After Trump-Driven Rally
Ethereum experienced wild price swings following news that Trump’s proposed crypto reserve included ETH—an unexpected endorsement that briefly sent prices soaring 15% from $2,200 to $2,550 on Monday. However, the rally proved short-lived as sellers emerged, pushing ETH back down to around $2,100—a 16% drop from its intraday high.
Approximately $1.8 billion in Ethereum-related positions were liquidated during the reversal, primarily impacting over-leveraged longs who entered during the euphoric phase. The sharp correction highlights the fragility of sentiment-driven moves in crypto markets, especially when macro headwinds like tariff threats counterbalance bullish narratives.
Despite the pullback, Ethereum fundamentals remain strong. The network continues to lead in decentralized finance (DeFi) activity, NFT minting, and Layer-2 scaling solutions. Developer activity remains robust, with ongoing upgrades aimed at improving scalability and reducing transaction fees.
However, short-term sentiment is now neutral-to-bearish. The funding rate for ETH perpetual swaps has dipped slightly below zero, and open interest has declined—both signs of waning speculative appetite. Traders are watching the $2,000 psychological level closely; a sustained break below could open the door to further downside toward $1,900.
Could Regulatory Clarity Boost Ethereum?
Unlike Bitcoin, Ethereum occupies a gray area in U.S. regulatory policy due to its transition to proof-of-stake. Any formal recognition—such as inclusion in a national strategic reserve—could provide much-needed clarity and institutional validation. Until then, price action will likely remain tied to macro trends and trader psychology rather than pure fundamentals.
Market Outlook: Navigating Volatility in 2025
The events of March 4 underscore a critical truth for crypto investors: digital assets are increasingly intertwined with global macroeconomic forces. While innovation continues at pace within blockchain ecosystems, external shocks—from trade policy to political rhetoric—can swiftly override technical strength or community enthusiasm.
That said, periods of sharp correction often create strategic entry points for long-term holders. Assets like Bitcoin and Ethereum continue to demonstrate resilience over multi-year cycles, supported by growing institutional adoption and technological maturation.
For traders, risk management is paramount. Using stop-loss orders, diversifying across asset classes, and avoiding excessive leverage can help preserve capital during turbulent phases. Meanwhile, staying informed through reliable data sources enables better decision-making in fast-moving environments.
Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop so sharply on March 4?
A: The 13% decline was primarily triggered by fears surrounding proposed U.S. tariffs under Donald Trump’s campaign rhetoric, which led to broad market risk-off behavior and over $1.1 billion in liquidations.
Q: Is Dogecoin a good investment despite its recent drop?
A: DOGE remains highly speculative due to its lack of intrinsic utility compared to other blockchains. While celebrity endorsements may cause short-term spikes, long-term value depends on actual use case development.
Q: What factors influence Ethereum’s price beyond market sentiment?
A: Key drivers include network usage (DeFi TVL, NFT volume), developer activity, regulatory developments, and upgrades like Dencun that enhance scalability and reduce fees.
Q: How do ETF inflows affect Bitcoin’s price?
A: Strong and consistent ETF inflows signal institutional demand, often supporting price appreciation. Conversely, weak inflows—as seen with only $3.8 million on March 3—suggest hesitation and can precede downtrends.
Q: Can political statements really move crypto markets?
A: Yes. High-profile figures like Trump or Biden can sway sentiment significantly, especially when discussing regulation or national reserves. These comments influence both retail and institutional expectations.
Q: What should traders watch for in volatile markets?
A: Monitor liquidation levels, funding rates, ETF flows, on-chain metrics (like exchange reserves), and macroeconomic news. Combining technical and fundamental analysis improves timing accuracy.
Final Thoughts
March 4 served as a reminder that cryptocurrency markets are not immune to traditional financial forces. While innovation drives long-term value, short-term price action remains highly sensitive to sentiment, leverage dynamics, and global policy signals.
Investors who combine disciplined risk management with deep market understanding are best positioned to navigate these cycles successfully. As adoption grows and infrastructure matures, digital assets may gradually decouple from speculative swings—but until then, vigilance remains essential.
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