The crypto market faced a sharp selloff overnight as renewed trade conflict fears between the United States and the European Union shook global risk sentiment. Bitcoin and major altcoins reversed recent gains, with traders reacting to fresh tariff headlines and the possibility of escalating economic retaliation on both sides of the Atlantic. While crypto is often viewed as a separate market, this move once again showed how quickly digital assets can behave like high-beta risk trades when macro uncertainty spikes.

According to analyst Darkfost, the liquidation impact was immediate and aggressive. More than $800 million worth of leveraged positions were wiped out in a matter of hours, including roughly $768 million in long liquidations. The scale of long closures suggests that traders were positioned for continuation to the upside, but were caught offside as prices rolled over sharply.

What stood out most was where the damage occurred. Darkfost noted that Hyperliquid recorded the largest share of forced liquidations, with $241 million, while Bybit followed closely with $220 million. The wave of liquidations appears partly tied to the announcement of new tariffs targeting Europe, which triggered an equally fast response from EU policymakers, reigniting the broader “trade war” narrative across markets.

CME Opens the Door to Fresh Volatility

Darkfost warns that the timing of this selloff matters as much as the liquidation size. As soon as CME trading opened, Bitcoin saw a sharp downside move, suggesting that institutional flows and macro-linked positioning played a direct role in the shakeout. In past risk-off episodes, the CME open has often acted like a volatility trigger, especially when markets are already fragile, and leverage is elevated across major exchanges.

This is why the next few hours are critical. The same type of move could easily repeat at the opening of the US markets, where liquidity conditions and headline sensitivity tend to amplify reactions. If sellers press again, the market could see another cascade of forced closures, particularly in high-beta altcoins that remain vulnerable after the overnight wipeout.

The message is straightforward: stay cautious and avoid overexposure to leverage while the macro backdrop remains unstable. Liquidations can create sharp bounces, but they can also reset momentum quickly if fear spreads across risk assets.

Darkfost adds that attention should remain on incoming political updates. The market is now trading the narrative, not just the chart. Further statements could arrive at any moment, and as history has shown, Trump often delivers market-moving headlines right in the middle of the weekend.

Bitcoin Holds Fragile Rebound As Crypto Tests Macro Nerves

Bitcoin is trading near $93,100 after a sharp rejection from the $96,000–$97,000 supply zone. The chart shows BTC still struggling below key moving averages, with momentum capped by the declining blue trendline overhead. This reinforces the idea that the latest upside attempt was more of a rebound than a clean trend reversal.

Structurally, price is forming higher lows after the violent breakdown from the $110,000 area. However, the rebound remains vulnerable as long as BTC stays trapped beneath resistance and fails to reclaim the mid-$90,000s with conviction. The recent candles also highlight hesitation, with wicks suggesting aggressive selling into strength.

The red long-term moving average is rising near the low-$90,000s, acting as a potential dynamic support zone. If Bitcoin holds above that level, it keeps the recovery structure intact and prevents a deeper reset toward prior liquidity pockets.

This matters for the broader crypto market. When BTC remains range-bound under resistance, altcoins usually struggle to sustain rallies and become more sensitive to liquidation-driven volatility. Risk appetite can return quickly, but it requires Bitcoin to break above resistance and hold. Until then, crypto remains in a fragile stabilization phase, not a confirmed bullish continuation.

Featured image from ChatGPT, chart from TradingView.com 

The cryptocurrency market is showing signs of short-term relief as Bitcoin and major altcoins attempt to stabilize after weeks of sustained selling pressure. Prices have rebounded modestly across the board, easing some of the recent bearish momentum. However, sentiment remains fragile. Many analysts argue that this move fits the profile of a relief rally rather than the start of a durable trend reversal, pointing to still-weak market structure and unresolved macro and regulatory risks.

Against this backdrop, a draft market structure bill released by the US Senate is drawing significant attention.  The proposed framework represents a potential structural shift in how crypto assets are treated within the US financial system.

The bill aims to clearly differentiate which crypto assets fall under the definition of commodities and which qualify as securities, while assigning regulatory oversight accordingly. Until now, the US regulatory approach has largely relied on enforcement actions, creating uncertainty for investors, developers, and institutions alike. By outlining classification criteria in advance, the proposal seeks to reduce ambiguity and provide a cleaner operating environment.

As markets digest this information, the focus is shifting from headline-driven volatility toward longer-term structural implications. Whether this regulatory clarity translates into sustained confidence remains an open question.

Regulatory Clarity Signals a Shift

A report from XWIN Research Japan highlights a critical nuance in the latest US market structure proposal: fully decentralized networks and DeFi protocols are not treated as traditional financial intermediaries. Developers, validators, and node operators are not automatically classified as regulated entities, signaling a formal recognition of decentralization as a core structural attribute rather than a loophole to be closed.

This distinction is meaningful, as it reduces legal uncertainty for open-source contributors and preserves the permissionless nature of decentralized infrastructure.

In contrast, centralized entities face a more clearly defined regulatory perimeter. Exchanges, brokers, and custodians are expected to comply with stricter rules on registration, asset segregation, and disclosure. Rather than targeting innovation, these requirements appear designed to professionalize market infrastructure and align centralized crypto businesses with existing financial standards.

Within this framework, Bitcoin, Ethereum, stablecoins, and spot ETFs are implicitly assumed to remain integrated into the US financial system, reinforcing their status as legitimate financial instruments.

On-chain data already reflects this transition. Metrics from CryptoQuant show that near the $90,000 Bitcoin level, retail activity remains muted while mid- and large-sized spot orders dominate. This pattern suggests neither speculative excess nor panic-driven exits, but measured positioning by larger investors.

Taken together, these signals imply a market gradually shifting from reactive, headline-driven behavior toward a more structure-driven phase. Regulatory clarity may not spark immediate price moves, but it is already influencing how capital positions itself across the crypto landscape.

Total Crypto Market Cap Enters Consolidation Phase

The total cryptocurrency market capitalization chart shows a market in consolidation after an aggressive multi-quarter expansion. Following the strong advance from late 2023 into mid-2025, total market cap peaked near the $3.8–$4.0 trillion zone before entering a corrective phase. Since then, price action has transitioned into a broad range, with higher volatility compressing into a more orderly structure.

Currently, the total market cap is hovering around the $3.2 trillion level, which aligns with a key former resistance zone that has now acted as support multiple times. The weekly structure suggests a cooling phase rather than a breakdown. Price remains above the rising 200-week moving average, which continues to slope upward and reinforces the idea that the primary market trend is still constructive.

Shorter-term moving averages have flattened, reflecting indecision and reduced momentum after the earlier impulsive move. Volume has declined from peak levels, indicating that aggressive distribution pressure has eased, but strong expansion demand has not yet returned. This combination is typical of mid-cycle consolidation rather than terminal weakness.

From a structural perspective, the market is digesting prior gains while maintaining a higher-low framework relative to previous cycles. A sustained hold above the $3.0 trillion region keeps the broader bullish structure intact. However, failure to defend this zone would expose the market to deeper retracements toward long-term trend support.

Featured image from ChatGPT, chart from TradingView.com