On Thursday, Bitcoin and the majority of cryptocurrencies experienced a significant downturn, resulting in a total market cap decrease of more than 5.7%, bringing it down to $2.6 trillion.
Among the worst affected was Pi Network (PI), which sank to a record low of $0.56—an over 80% decline from its peak in February.
Pepe (PEPE), the third-largest meme coin, saw a 17% drop, while Ethena (ENA) decreased by 18%. Other notable losers included altcoins like Hyperliquid, Berachain, Bonk, Jito, and Official Trum, each recording declines exceeding 15%.
This sharp downturn coincided with rising probabilities of a U.S. recession. Data from Polymarket indicated that the likelihood of a recession surpassed 70%. MetLife, a top financial services provider, adjusted its recession outlook to 40%, while Goldman Sachs and PIMCO lifted their predictions to 35%.
These heightened odds followed Donald Trump’s announcement of tariffs on all nations exporting goods to the United States. Analysts have warned that such tariffs could signal a black swan event that might transform the global economy.
Multiple countries have already signaled their intention to retaliate. For instance, Canada has implemented a 25% tariff on vehicles manufactured in the U.S., which could escalate tensions further. In a discussion with Bloomberg, Trade Secretary Howard Lutnick cautioned that tariffs against responding countries could rise significantly.
The declines in significant altcoins like Pepe, Pi Network, and Ethena paralleled drops in U.S. stock indices, with the Dow Jones, Nasdaq 100, and S&P 500 decreasing by 1,200, 200, and 815 points, respectively.
This market drop was fueled by increasing anxiety among investors, causing the fear and greed index to plummet into extreme fear territory at 11, and the cryptocurrency fear index to fall to 24.
However, there is a silver lining; historically, bull market cycles tend to initiate when fear reaches its peak. The last occasion the CNN Fear and Greed Index hit such a low was in March 2020, aligning with the onset of the COVID-19 pandemic, which preceded a notable rally in stocks and crypto following Federal Reserve interventions with interest rate cuts and liquidity support.
As such, there remains a possibility for Bitcoin and altcoins like Pi Network, Pepe, and Ethena to rebound as the current wave of panic selling subsides.