Crypto’s selloff, explained

The crypto market slid to fresh lows for the year as recession fears rattled markets.
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Bitcoin fell under $77K as markets shuddered. Also, several states took steps toward BTC reserves, and global crypto adoption continues to evolve.
Stablecoins are primed for a pivotal year. And why they could be significant to the future of the U.S. dollar.
The latest numbers from the “Crypto Fear & Greed Index.” Plus more key stats to know from around the cryptoverse.
MARKET BYTES
Crypto markets dip as economic uncertainty rises
For the third week in a row, volatility rolled through crypto markets, with most tokens seeing sharp declines. On Monday, bitcoin fell below $77,000 (approaching its pre-election price), ether dropped below $1,800 (in the largest intraday drop since 2023), and a wide variety of altcoins saw major losses. By Wednesday, prices inched upward after the latest consumer price index report showed inflation cooled to 2.8% in February.
So, what’s been causing markets to quake, and what might happen next? Let’s dig in…
White House policies shake up markets
Crypto’s dip mirrored a major selloff on Wall Street, where the tech-heavy Nasdaq saw its worst day since 2022 following a weekend interview with President Trump where he suggested that there could be a “period of transition” for the economy as his trade policies take effect.
For crypto specifically, prices dropped despite a flurry of positive policy news from Washington, including a high-profile Digital Asset Summit at the White House on Friday and the announcement of a strategic bitcoin reserve.
Some analysts pointed to potential market disappointment over the administration’s announcement that the bitcoin stockpile would be built around tokens the government has seized, rather than new purchases.
What’s next?… One point of view suggests markets may be looking for new narratives to emerge: “With the digital asset summit at the White House and President Donald Trump's bitcoin reserve executive order already behind us, crypto markets have run out of near-term positive catalysts,” noted CoinDesk.
Other market watchers are more optimistic. Coinbase CEO Brian Armstrong, who was at the White House, told CNBC the crypto summit helped “breathe new life into the industry.” “Whatever is happening in the short term, I’m confident that in the long term this is going to be an upward trend for bitcoin,” Armstrong added.
Texas, New Hampshire, Oklahoma take steps towards BTC reserves of their own
It’s not just the federal government that’s been debating the creation of a strategic bitcoin reserve. States across the country have also been considering similar moves.
Last Thursday, the state senate in Texas passed a bill that would enable the allocation of some public funds for buying bitcoin. State governments in Arizona, Oklahoma, and New Hampshire have also taken recent steps on similar legislation.
State of affairs… In Utah, the state legislature passed a landmark crypto regulation bill on Friday, but dropped the provision that would have created a strategic stockpile. So far, Montana, South Dakota, Pennsylvania, North Dakota, and Wyoming have all rejected BTC reserve bills, while 18 state proposals remain pending.
Global crypto adoption continues to evolve
Crypto, of course, is global, and new use-cases continue to emerge around the world. Here’s a quick rundown of some recent headlines beyond the U.S.
In Spain, BBVA (the nation’s second-largest bank) has received permission to begin offering BTC and ETH trading to clients, a move that was made possible by the European Union’s new Markets in Crypto Assets (MiCA) regulations.
Pakistan, which is one of the world’s biggest markets for remittances (money sent home by friends and family abroad), is seeking to create blockchain-based solutions that would be faster and cheaper than current systems.
And Brazil’s post office is investigating the use of blockchain technology and AI to provide “solutions for our business, operations, and hiring challenges.”
Reserve currency… According to some analysts, the U.S. bitcoin reserve could also increase crypto adoption abroad. Speaking to CNBC, Skybridge Capital’s Anthony Scaramucci opined that, “The fact that the United States is going to hold this asset means that other countries … are going to end up buying this asset as well.”
STABLE STAKES
Why stablecoins could be increasingly important to the future of the U.S. dollar
The market cap of the five biggest stablecoins recently hit new highs of more than $200 billion — up more than $40 billion since November’s U.S. election — and some of the world's largest banks and fintech firms are rushing to grab a piece of the fast-growing industry.
In D.C., policymakers are increasingly paying attention: Stablecoins were the subject of a hearing on Tuesday before the House Financial Services Committee.
“We increasingly believe they'll be the topic of the year in crypto,” Axios said of stablecoins in an article this week.
The Trump administration is also deeply interested in stablecoins, seeing them as a way to help maintain the U.S. dollar’s role as the world’s premier currency. As Treasury Secretary Scott Bessent put it at last week’s first-ever White House Digital Asset Summit, “We are going to keep the U.S. the dominant reserve currency, and we will use stablecoins to do that.”
What exactly does that mean? Here’s what you need to know.
What is a stablecoin?
Stablecoins like USDC are a specialized kind of crypto that typically have their value pegged to a reserve currency, most often the U.S. dollar. Because they’re designed to avoid the volatility that’s typical of most other cryptocurrencies, stablecoins have become popular as a store of value, a medium of exchange, and as a bridge between traditional finance and the crypto ecosystem.
They exist across a variety of blockchains including Ethereum, Base, Solana, XRP Ledger, and Cardano.
For people who frequently send money abroad, stablecoins are a faster, cheaper alternative to money transfer services. In countries with unstable currencies, stablecoins have provided a safe-haven for residents looking to securely store value. And in DeFi, stablecoins provide liquidity to trading pairs or lending pools.
Why might stablecoins benefit the U.S. dollar?
Around 99% of all stablecoins are pegged to the U.S. dollar — helping make the dollar the de facto currency of the digital economy.
Stablecoins also have a powerful indirect benefit to the dollar. Tokens like USDC are backed 1:1 with “highly liquid reserves,” often in the form of U.S. Treasury notes (which are a way of investing in the U.S. government’s debt).
According to a recent CoinShares report, stablecoin issuers have become major purchasers of U.S. Treasuries — surpassing even nations like Germany and South Korea.
“For the dollar to maintain its status as the world’s reserve currency, there must be consistent demand for U.S. debt,” CoinDesk noted. ”The administration identified stablecoins as an ideal partner in this strategy.”
What policy proposals are on the horizon?
President Trump has set an August deadline for Congress to deliver comprehensive legislation to his desk.
Right now, there are two stablecoin bills making their way through Congress — the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, and the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
The STABLE Act — written by House Financial Services Committee Chair Rep. French Hill (R-AR) and Rep. Bryan Steil (R-WI) — updates prior legislative efforts “to provide multiple regulatory pathways for payment stablecoin issuers in the United States” and empowers the Office of the Comptroller of the Currency (OCC) in the process.
The GENIUS Act — introduced by Sen. Bill Hagerty (R-TN) and cosponsored by Senate Banking Chair Tim Scott (R-SC), as well as Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) — also builds off a series of prior stablecoin bill proposals that have stalled in recent years.
If passed, the bill would clearly define who can issue stablecoins, while creating bank-like regulations for stablecoin issuers and protecting the right for stablecoins to be issued on public blockchains like Ethereum.
“Passing clear and sensible regulations for stablecoins is critical to maintaining U.S. dollar dominance, promoting responsible innovation, and protecting consumers,” said Gillibrand.
The bottom line
The $200 billion market that the top stablecoins currently represent is a tiny portion of the nearly $30 trillion in markets for U.S. treasuries that exist today. But as Trump Administration Crypto Czar David Sacks noted recently, the stablecoin market could multiply to “potentially trillions of dollars” in the coming years — and that growth could bring major benefit to the U.S.
“Stablecoins have the potential to ensure American dollar dominance internationally,” Sacks said, and “to increase the usage of the U.S. dollar digitally as the world’s reserve currency.”
NUMBERS TO KNOW
$21 billion
The amount that Strategy (formerly MicroStrategy) aims to raise “for general corporate purposes, including the acquisition of bitcoin,” the company announced Monday in a release. As of Wednesday, Strategy remains the largest corporate holder of bitcoin with 499,096 BTC, worth about $41 billion.
$1.1 billion
Total venture capital funding that crypto projects raised in February, down from January’s $1.57 billion, even though the number of companies raising funds was up slightly, according to TIE Terminal data. As Blockworks notes, “Perhaps we can sum it up to a shorter month.”
360,000
Active wallets on the Avalanche network as of last Tuesday, notching a multi-year high fueled by memecoin, gaming, and decentralized exchange activity, reports The Defiant.
15
Level that the Crypto Fear & Greed index hit last week, indicating “extreme fear” — its lowest reading so far in March. The index, which measures sentiment on a scale of 1 to 100 via a variety of metrics including volatility and social searches, is currently in the “fear” zone at 34, indicating that traders are feeling pessimistic.
TOKEN TRIVIA
What is Bitcoin’s maximum supply?
A
50 million
B
There is no maximum supply
C
21 million
D
12 billion
Find the answer below.
Trivia Answer
C
21 million