Why Are Crypto Asset Markets Down Today?
On April 8, the crypto asset market briefly touched US$2.45 trillion before dropping 0.88%, losing US$21.12 billion as the euphoria of a ceasefire began to fade due to early violations, ongoing inflation concerns, and capital rotation into stocks instead of digital assets.
Bitcoin
BTCUSD
fell to US$71,023 while World Liberty Financial (WLFI) became one of the most lossmaking tokens among actively traded assets, correcting more than 13% after their treasury drained the stablecoin lending pool.
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World Liberty Financial's treasury deposited 3 billion WLFI tokens as collateral at Dolomite and borrowed US$50.44 million in USD1, causing the entire pool liquidity to be drained. The USD1 deposit interest rate surged to 35.81% and the loan interest rate rose to 30%, raising fears of a mass liquidation if WLFI token prices fall further.
Morgan Stanley launched a spot Bitcoin exchange-traded fund (ETF) on NYSE Arca with a fee ratio of 0.14%, the lowest in the market currently. ETF analyst Eric Balchunas projects assets worth US(million in the first year and first-day volume of US)million, despite this fund entering a market that experienced US$6.3 billion in ETF outflows from November to February.
Ethereum Foundation continues converting ETH to stablecoins, selling 3,750 ETH worth US$8.3 million at an average price of US$2,214 via CoW Protocol. The foundation still holds 1,250 ETH valued at around US$2.77 million allocated for grants and donations.
Crypto Market Dips from US$2.45 Trillion as Ceasefire Breaks
Total crypto market capitalization was at US$2.39 trillion on April 9, after briefly reaching US$2.45 trillion in the previous session. The rally driven by ceasefire news lost momentum as Gulf countries reported attacks on the first day of conflict cessation, and Iran still demanded transit conditions through the Strait of Hormuz. This uncertainty dampened the risk-on sentiment that had pushed the crypto market higher just a day earlier.
Capital rotation accelerated the decline. Stocks actually strengthened after the ceasefire news, while cryptocurrencies corrected. This pattern repeats, where both asset classes struggle to rally simultaneously during the Iran conflict.
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Meanwhile, total 24-hour liquidations reached US$272.86 million across 79,415 traders, with long positions liquidated for US$170.42 million, about 62% of the total.
The March CPI report due Friday adds an extra layer of caution. If data shows high inflation, expectations for interest rate cuts will be further delayed, also pressuring liquidity for speculative assets.
The US$2.39 trillion zone at the 0.382 level remains the market’s current support. If it falls below, the market could weaken to US$2.33 trillion at the 0.236 level. Conversely, the market needs to reclaim US$2.44 trillion and US$2.45 trillion to turn bullish again, but the US$2.49 trillion area at the 0.618 level is a critical boundary. If it surpasses US$2.49 trillion, the next targets open up to US$2.56 trillion and US$2.65 trillion.
If US$2.39 trillion holds, traders who bought during the dip might try to push the market back to US$2.45 trillion. But if this level breaks, the next target drops to US$2.33 trillion.
Bitcoin’s Cup and Handle Pattern Still Keeps the US$81,000 Target Alive
Bitcoin traded at US$71,023 on April 9, down about 1% amid overall market pressure. However, the daily chart still offers technical hope. Since late March, BTC has formed a pattern resembling a cup and handle. The rounded bottom of the cup formed in late March, and the current consolidation acts as the handle.
This pattern has an 11.46% breakout projection from its neckline. BTC needs a confirmed daily close above US$71,673 to break out of the handle. If the price closes above US$73,272 at the Fibonacci 0.618 level, the cup’s neckline will be pierced, and Bitcoin could move toward the US$81,000 zone.
Daily price weakness does not invalidate this pattern. Typically, the handle will correct before a breakout attempt, and the current dip still keeps the price within the pattern’s bounds. The ceasefire breakdown and CPI worries might prolong the handle duration but won’t invalidate the pattern.
On the downside, US$70,074 at the Fibonacci 0.382 level is the first support. A drop below US$68,096 would weaken the handle pattern. A breakdown below US$64,899 at the cup’s base would fully invalidate it. If the daily close surpasses US$73,272, the target rises to US$81,000. But if it closes below US$70,074, attention shifts to US$68,096.
World Liberty Financial $5 WLFI$30 Drops 13% After Treasury Withdraws Funds from Its Own Lending Pool
World Liberty Financial (WLFI) traded at US$0.0916 after falling 13.42% since April 7, making it one of the weakest-performing tokens among those still actively traded. This sell-off was triggered by specific factors outside the overall market weakness.
On April 8, WLFI’s strategic reserve wallet deposited about 3 billion WLFI governance tokens as collateral at Dolomite and borrowed US$50.44 million in USD1, the project’s dollar-pegged stablecoin. This move caused the utilization of the pool to exceed 100%, resulting in negative liquidity of -232,000 tokens. The USD1 deposit rate surged to 35.81%, and the borrowing cost reached 30%.
The problem is clear. If WLFI’s price drops further, this over-collateralized position risks liquidation, potentially triggering a domino effect in the pool and trapping lenders attracted by high yields.
Technically, WLFI was already bearish before the withdrawal. Its price has been moving within a downward channel since mid-February. From February 18 to April 7, it formed lower highs, while RSI formed higher highs—indicating hidden bearish divergence signaling continued bearish momentum. This was confirmed as the 13.42% decline followed shortly after.
WLFI must stay above US$0.090 at the 0.382 level to avoid deeper correction toward US$0.080 and US$0.073. Falling below US$0.073 could bring the price to the lower trendline of the falling channel. A new strength would emerge if WLFI reclaims US$0.096. Surpassing US$0.106 would turn the short-term structure neutral again.
US$0.090 acts as a boundary between potential stabilization and further decline toward US$0.073 and the lower area of the falling channel under liquidation pressure.
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