The cryptocurrency market is currently experiencing a significant downturn, with Bitcoin’s price dropping below $115,000. In addition to Bitcoin, several major altcoins, including Ethereum (ETH), XRP, Cardano (ADA), and Hyperliquid (HYPE), have seen declines surpassing 4%. Analysts are looking into the underlying causes of this abrupt shift in market sentiment.
One of the primary factors contributing to the ongoing crypto crash is the response of investors to the recent announcement from the Federal Reserve regarding interest rate cuts. The Fed decided to reduce interest rates by 0.25% in its latest meeting, signaling a potentially more accommodative stance in the future. Stephen Miran, a recent appointee by former President Donald Trump, advocated for an even more aggressive cut of 0.50%. While historically, interest rate cuts are viewed positively for higher-risk assets, including cryptocurrencies, it appears that many investors have opted to “sell the news.” This phenomenon, where traders monetize gains after significant events, is leading to a sell-off as they await the next potential market catalyst.
The market is further pressured by a wave of liquidations. According to data from CoinGlass, liquidation events surged nearly 400% on Monday, resulting in over $631 million in losses across the crypto space. Among these liquidations, Ethereum accounted for approximately $182 million, while Bitcoin saw $69 million wiped out. Retail traders suffered significantly, with more than 218,000 accounts being liquidated. One notable liquidated trade was valued at over $12 million in Bitcoin. Historically, these liquidation events tend to exacerbate price declines, as forced selling can create a cascading effect within the market.
Adding to the concern is Bitcoin’s inability to maintain upward momentum, particularly in the wake of the Fed’s interest rate decision. As depicted in the recent price charts, Bitcoin has struggled to break the $117,000 mark, which adds to the worries. Analyzing the weekly chart reveals a rising wedge pattern, suggesting that if Bitcoin continues to follow this trajectory, it could lead to a protracted bear market. Such a decline in Bitcoin’s price would likely drag down the rest of the cryptocurrency market, given its dominant influence across various altcoins.
As the situation evolves, investors remain on edge, closely monitoring market developments and seeking guidance on upcoming key events that could influence a recovery or further declines in the cryptocurrency landscape.
