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Cryptocurrency prices plunged on Tuesday, extending a downtrend that began in November last year.

Bitcoin (BTC) fell below the critical support level of $89,220, reaching an intraday low of around $86,000.

Altcoins fared even worse, with Jasmy Coin (JASMY) dropping to $0.01683, its lowest level since Nov. 5, and 72% below its 2024 highs. Pepe (PEPE) and Dogecoin (DOGE) also declined by over 8%, while the combined market capitalization of all meme coins tracked by CoinGecko fell below $60 billion.

Three key catalysts behind the crypto crash

There are three potential catalysts for the ongoing crypto crash.

First, the market reacted negatively to former President Donald Trump’s commitment to imposing tariffs on Canadian and Mexican goods starting in March. These tariffs were postponed by a month to allow negotiations focused on drug policies and immigration.

A 25% tariff on U.S. imports would likely lead to higher inflation and slower economic growth, putting pressure on the Federal Reserve to act. The Fed has already signaled that it will only cut interest rates when inflation moves closer to its 2% target. However, recent economic data shows that both headline and core inflation figures are moving further away from this goal.

Second, Bitcoin and other crypto prices are declining as U.S. stocks were mixed. The Nasdaq 100 index opened lower by around 0.55% while the S&P 500 index was nearly flat. The Dow was up 0.36%. The weakness in the tech sector is likely due to market anticipation of NVIDIA’s fourth-quarter earnings, which are expected to provide further insight into the artificial intelligence sector.

Bitcoin price flashes sell signal

Third, Bitcoin and other crypto prices, including Pepe, Dogecoin, and Jasmy, fell further after BTC flashed a sell signal on the daily chart. The daily chart shows that Bitcoin formed a double-top pattern at $108,438 in December and January.

It has now broken below the neckline at $89,136, confirming a bearish outlook. It has also moved below the 50-day and 100-day moving averages. A continued sell-off could push Bitcoin toward the next key support level at $73,725, the highest swing in March last year, an 18% drop from current levels. Such a move would likely trigger further declines across the altcoin market.

On the upside, there is still a chance that this crash is a false breakdown, similar to what happened on Jan. 13, which eventually led to a strong rebound.