The cryptocurrency market has faced a significant setback following a record-breaking liquidation event caused by heightened trade tensions initiated by former U.S. President Donald Trump. According to prominent analyst Matthew Hyland, the market’s recovery could take no less than two months to regain its previous momentum.
The Impact of the ‘Trump Dump’
The recent downturn was triggered by Trump’s directive to impose increased tariffs on goods from Canada, Mexico, and China. This decision set off a domino effect that led to a powerful bearish trend in the crypto market. Hyland highlighted the scale of the liquidation, which amounted to $2.2 billion, marking the largest in the history of digital asset trading.
Co-founder of the Bybit exchange, Ben Zhou, provided a contrasting estimate, suggesting that the real volume of liquidated long and short positions might be between $8 billion and $10 billion.
Historical Parallels
Hyland drew comparisons between the current market conditions and similar events in 2020 and 2022. In both instances, major cryptocurrencies like Ethereum (ETH) experienced significant crashes but required more than two months to fully recover to their pre-dump levels.
For instance, Ethereum’s price drop between February 2 and 3, 2023, echoed previous patterns. Hyland believes that assets like Ethereum, Solana (SOL), and others, which saw steep declines, are unlikely to recover before April.
Bitcoin’s Exceptional Resilience
While Ethereum and other altcoins are expected to take months to recover, Bitcoin has shown remarkable resilience. On February 3, BTC’s price briefly dropped to $91,572 . However, it had rebounded to $102,000, effectively recovering its losses within hours.
A Long Road to Recovery
Despite Bitcoin’s swift rebound, the broader crypto market’s path to recovery appears more complex. Hyland’s analysis underscores the need for patience and strategic planning for traders and investors navigating the market during this volatile period.
The coming months will be critical in determining whether the market can sustain its resilience and bounce back stronger, as it has in the past.