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In a swift and dramatic reversal, crypto markets have shed hundreds of billions of dollars in the space of just one day, raising questions about the sustainability of recent gains spurred by the surprise announcement of a new US Crypto Reserve. At the peak of the initial rally—shortly after former President Donald Trump’s Sunday statement unveiling the Reserve—total crypto market capitalization soared from approximately $2.7 trillion to $3.1 trillion. But, as of the latest readings, those gains have not just evaporated; the market now stands at around $2.6 trillion, even lower than it was before the announcement. Why Is Crypto Down Today? “The real driver here is the GLOBAL move towards the risk-off trade,” writes The Kobeissi Letter (@KobeissiLetter) via X. According to this analysis, heightened trade war tensions and broad economic policy uncertainty have caused “ALL risky assets” to retrace sharply, including stocks, oil, and crypto. By contrast, traditional safe havens such as gold have continued to post gains, reinforcing the perception that cryptocurrencies are far from being a refuge in turbulent times. Related Reading: Flash Crashes On The Rise: Understanding The Recent $300 Billion Crypto Drop This sudden downturn has been accompanied by staggering figures. “Over the last 24 hours, crypto has erased -$500 BILLION of market cap in a massive reversal,” The Kobeissi Letter notes. Bitcoin, which initially appeared poised for a major rally, has tumbled roughly 3% below its pre-announcement levels, losing nearly $250 billion in market value in just 12 hours. Ethereum (ETH) has seen an even sharper retreat. Prior to the US Crypto Reserve news on Sunday, ETH touched a local low of $2,173 on March 2. Soon after the announcement, it climbed to $2,550 before plunging to $2,002—about 8% lower than its pre-announcement bottom. “This came with a huge swing in sentiment in what appears to have been a colossal retail trap,” The Kobeissi Letter adds, noting that the Crypto Fear & Greed Index surged from around 20 (extreme fear) to nearly 55 (close to greed) before cratering back to the low 20s. Adding to these signals, the final week of February registered a record $2.6 billion in crypto fund outflows—an alarming statistic that surpassed the previous high by $500 million. Observers suggest that, despite the “most bullish announcements ever,” capital is rotating out of cryptocurrencies primarily because of intensifying macroeconomic headwinds. Related Reading: Crypto Market Sees Record Flash Crashes, What’s Going On? Meanwhile, safe haven assets continue to outperform. “Our premium members were buying gold for months,” The Kobeissi Letter indicated, referring to a strategy that saw gold purchases during January’s dip. Since the start of the year, gold has climbed around 10%, with analysts forecasting further upside. “We bought the dip into January and called for $2,850+. On Friday, we called for another higher low at $2850 and gold is nearing $2900+ again now,” the market commentary stated. Where crypto was once considered an emerging hedge against economic uncertainty, current market behavior suggests it is now lumped in with other “risky assets,” driven at least as much by global sentiment shifts and macroeconomic pressures as by sector-specific developments. At press time, Bitcoin traded at $83,594. Featured image from Shutterstock, chart from TradingView.com