Compass Investments

– Trump’s 15% duties, the $285M theft from Drift Protocol, and bitcoin’s 47% drop from its high. The “Fear and Greed” level held at 8 for 46 days. ZachXBT vs. Circle, Tom Lee predicts a recovery.

Opening a crypto portfolio on April 5, 2026 requires a lot of self-control. Bitcoin is hovering near $67,000, almost half of its peak of $126,272 on October 6 of last year.

The Fear and Greed Index is at 8 out of 100, a level of extreme fear not seen since the Terra-Luna collapse in June 2022, and has not left the critical zone in 46 consecutive days. The question now is not “when will this drawdown end?, but its root causes and current status. The answers to these questions are much more multifaceted than it seems from the catchy headlines.

The main factor in the deterioration of the market has a specific name: trade duties imposed by the Trump administration.

In February, the announcement of a massive 15 percent increase in global import duties crashed crypto assets by more than 5 percent in a matter of hours, and forced closures burned through $2.56 billion in a single weekend. Jeff May, CEO of BTSE, explained the situation to CoinDesk:

“We’re seeing that the tariff hikes are pushing investors to sell off crypto assets in anticipation of a more tangible market crash.

logic is simple and stark: inflated fees stimulate inflationary expectations, those expectations delay the decision to cut rates, and high rates put pressure on the valuation of risky assets. Cryptocurrencies, which many imagined as a defense against macro risks, behaved in the exact opposite way, falling in sync with technology stocks.

the numbers are inexorable: bitcoin closed the first quarter of 2026 with a loss of -23.8% , their worst quarterly result since 2018, when it fell -49.7% . Ethereum “sagged” by more than 60% from the top, trading closer to $1,870. The total market capitalization of the crypto sector reached $2.38 trillion. Standard Chartered adjusted its annual forecasts downward, lowering expectations for bitcoin to $100,000 (from the previous $150000), allowing for a temporary drop to $50000 before recovery.

Tom Lee of Fundstrat, speaking on CNBC’s The Exchange, called the current state of the cryptocurrency storm a temporary phenomenon, not a structural collapse: “2026 will have two parts. The first part may be painful, but it will set the stage for a powerful second half.

Fundstrat has already warned institutional clients of the likelihood of a deep correction in the first half, with a target range for BTC of $60,000-$65,000.

amid the macroeconomic turmoil, another blow followed on April 1, 2026: the Drift protocol exploit, the biggest DeFi attack of the year. The platform on Solana, where over $550 million was blocked, lost $285 million in just twelve minutes.

The attack exploited not a software flaw – Drift was double audited, most recently in February by ClawSecure – but a management vulnerability: with only 2 of the 5 required multi-signatures, the attackers took control of the admin keys and emptied the three main reservoirs. Elliptic and TRM Labs attribute this operation to the North Korean Lazarus Group.

The team posted a message on X, which immediately went viral: “This is not an April 1 prank.

In the hours that followed, the DRIFT token plummeted 40% and eleven projects in the Solana ecosystem suffered collateral damage.

The events following the hack added another layer of ambiguity that the industry will not soon forget. Blockchain analyst ZachXBT documented how an attacker used Circle’s Cross-Current Communication Protocol (CCTP) to transfer over $232 million in USDC from Solana to Ethereum in over a hundred transactions in six hours – all during U.S. business hours.

Circle did not intervene in any way.

Circle slept while multi-million dollar USDCs flowed through the CCTP from Solana to Ethereum in a matter of hours.