Santiment says the “Trump tax” isn’t the only force behind crypto’s sharp sell-off
Blaming crypto’s latest plunge on a so-called “Trump tax” makes for a neat narrative—but it misses how many forces hit the market at once. On-chain and market-structure signals show a classic multi-factor drawdown in which sentiment, leverage, and liquidity all aligned to the downside. First, leverage amplified every tick lower. Elevated open interest and crowded long positioning meant that a modest dip triggered cascading liquidations across perpetual swaps. As funding turned negative and basis compressed, forced sellers overwhelmed organic dip-buyers. Second, liquidity thinned at the worst possible time. Weekend and off-hours trading left order books shallow, so relatively small market sells pushed price through pockets of resting bids. Once key supports broke, algorithmic momentum strategies accelerated the move. Third, options dynamics mattered. Negative gamma near popular strike zones nudged dealers into selling into declines, exacerbating intraday volatility and widening candl...