Bitcoin drops 8%, US markets shed $2T in value — Should traders expect an oversold bounce?

Bitcoin and US stock markets all sold off sharply after US President Donald Trump shook up financial markets by announcing a list of reciprocal tariffs on several countries. On April 3, the S&P 500 saw a 4.2% drop at market open, its most significant single-day decline since June 2020. The Dow Jones Industrial Average fell 3.41%, to 40,785.41 from 42,225.32, while the Nasdaq Composite dropped 5.23%. Overall, $1.6 trillion in value was wiped out from US stock at the market open. Bitcoin’s value dropped by 8%, but a positive is bulls seem capable of defending the $80,000 support level. These steep declines essentially stem from uncertainty surrounding the new tariffs and amplify investors’ concerns about impending recession.Source: XData from CoinGecko that the total crypto market has dropped 6.8% over the past 24 hours and it seems unlikely that a relief rally is viable in the short-term.Crypto liquidations soar to $573MAccording to CoinGlass, in the past 24 hours, more than 200,000 traders were liquidated, with the total amount exceeding $573.4 million. The largest liquidation occurred on Binance, with an ETH/USDT position worth $11.97 million being force closed.Total crypto liquidation chart. Source: CoinGlassMeanwhile, Bitcoin’s open interest dropped below $50 billion, reducing market leverage. Joao Wedson, CEO of Alphractal, that the liquidation heatmaps indicate heavy leverage around $80,000, raising the potential for a potential drop to $64K-$65K if Bitcoin breaks this level with high trading volume.Bitcoin liquidation maps. Source: XThis article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.