Crypto markets are struggling to regain confidence after a sharp sell-off on Friday left many investors bruised and hesitant. The sudden drop erased nearly $1 trillion in total market value in just one hour—an extreme move even by crypto standards. While a partial recovery followed, trading volumes remain thin, reflecting ongoing concerns rather than a decisive return of buyers.

Bitcoin and Ethereum, the market bellwethers, have dropped toward important technical support levels. For Bitcoin, traders are watching zones near $108,000 and $106,000 as potential floors. A further decline to $102,000 could trigger more selling, with the psychological $100,000 mark looming as an even more critical threshold. Meanwhile, altcoins fared far worse during the sell-off, with some losing as much as 70% of their value, though a handful managed modest gains amidst the chaos.

Behind the sudden drop, several factors are at play. A U.S.–China trade scare prompted traders to exit risk assets across the board. This triggered a cascade of liquidations as leveraged positions swiftly unwound on most major exchanges. There is also chatter of possible earlier profit-taking after the total crypto market cap recently touched $4.27 trillion, but the real catalyst appears to be a classic macro sentiment shock—a reminder of how quickly downside momentum can build in this market.

Looking at derivatives, the picture is mixed. Bitcoin futures open interest remains steady near $25 billion, but negative funding rates on top exchanges suggest traders are leaning short, betting on further declines. At the same time, options traders are paying a premium for call options, hinting at some level of bullish expectation—or at least a desire to hedge against another sharp rally.

In summary, the crypto market is trading with low conviction after last week’s dramatic price action. While Bitcoin and Ethereum are holding above key supports for now, the weakness in altcoins, lack of strong buying interest, and high volatility in derivatives all point to a fragile environment. Until trading volumes pick up and clear evidence of renewed institutional or retail demand emerges, the risk of another sharp move—either up or down—remains elevated. For now, it’s a market better suited for cautious, short-term traders than for those seeking stability.