Risk Aversion Sentiment Triggers Crypto Selloff as Safe-Haven Assets Rally

A wave of risk aversion swept through global markets on February 23, creating a sharp divergence between traditional safe-haven assets and the cryptocurrency sector. The shift in investor sentiment reflects growing concerns about geopolitical tensions and policy uncertainty, with flight-to-safety dynamics driving precious metals higher while digital assets face significant headwinds.

Precious Metals and Stock Indices Show Flight to Safety

The risk-off mood propelled investors toward traditional safe-haven investments. Spot gold surged 1.00% to reach $5,158.75 per ounce, while spot silver posted more impressive gains of 2.72%, climbing to $87.01 per ounce. The equities market also reflected broader aversion to risk, with S&P 500 futures declining 0.67%, Nasdaq futures falling 0.87%, and Dow futures dropping 0.56%. These moves across different asset classes demonstrate how pervasive the shift toward defensive positioning has become.

Crypto Market Faces Sharp Selloff Amid Broader Risk-Off Sentiment

The cryptocurrency sector bore the brunt of the market’s aversion to volatility and risk. Bitcoin, which had been attempting to stabilize, dropped below $64,000 (down 4.00% over the past 24 hours), while Ethereum fell to $1.87K, experiencing a 5.73% daily decline. Solana also came under pressure, trading near $79.35 with a 6.64% 24-hour drop. The broader liquidation cascade highlighted the leverage-driven nature of the downturn, with the entire network recording $340 million in liquidations over the past hour, with long positions accounting for $332 million of that figure.

Trade Policy Uncertainties Fuel Market Volatility

Underlying the market turmoil are escalating trade tensions at the policy level. On February 22, former President Trump announced plans to raise global tariffs from the current 10% level to 15%, citing frustration with what he termed a “poorly executed” Supreme Court ruling. Such policy announcements typically increase aversion to risk across financial markets, as traders reassess the implications for global growth and corporate earnings. The combination of trade uncertainties and geopolitical tensions continues to drive investors toward protective asset positions, explaining why the risk-aversion dynamic persists across multiple asset classes simultaneously.