The crypto markets experienced what might be the biggest flash crash in their history yesterday, as Ethereum fell as low as $2,135 before recovering some of the losses. Crypto bulls were highly leveraged, and this high-risk approach ended in a cascade of stop-loss triggers, creating a chain reaction that caused one of the most significant flash crashes. 

The trigger for this event was the tariff announcement by the Trump administration. On Friday, Trump decided to apply a 25% tariff on Canada and Mexico and a 10% tariff on China, on top of existing levies. Crypto markets felt negative pressure heavily over the weekend, but the crash occurred early Monday. 

Since then, the Canada and Mexico tariffs have been delayed by one month, and negotiations are underway. China’s response was very mild, with no indication of trade war intentions. However, the damage to the crypto markets has already been done, with thousands of leveraged positions liquidated. Currently, the crypto market is in recovery mode rather than a bull cycle. 

The crypto market remains in a bull season, but altcoins are significantly weaker compared to previous cycles. Although Bitcoin dominance is lower than in the 2020-2021 cycle, the overall crypto market has grown considerably in terms of technology and investment. Despite this, Bitcoin dominance continues to rise daily, driven in part by a weak Ethereum. 

(ETHUSD Daily Chart) 

Ethereum has been ranging between $2,100 and $4,100 since late 2023. The range is wide, the swings are significant, and on Monday, the market experienced just how large these moves can be. The $2,100 support was tested with a massive daily candle, reaching a high of $2,935 and a low of $2,135, before closing at $2,818. This single move wiped out both long and short positions in one swift motion. 

Currently, the market is in recovery mode, with traders beginning to redistribute their damaged balances. Despite the pessimism surrounding Ether, ETF inflows painted a different picture. On Monday, during the sharp selloff, Ethereum ETFs saw net inflows of $83.54 million, while Bitcoin ETFs experienced $235 million in outflows. While this is just one day, it could be an early signal that altcoin season might be fast approaching. 

However, there is some negative sentiment around Ethereum, partly due to the ETH selling by the Ethereum Foundation. The foundation sold a total of 300 ETH worth $981,200 in January, sparking negative discussions about Ethereum’s future. Traders may need to see a different approach from the foundation and further de-escalation of the trade war before committing to Ethereum, the second-largest cryptocurrency, more fully. 

In the short term, $2,830 may act as a pivot point within the current range.