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Bitcoin and Ether in free fall!
1.30pm ▪ 4 minute read ▪ by Luc Jose A.
A new storm shakes the cryptocurrency market! Known for its volatility, the cryptocurrency market once again surprised investors with a significant decline. Key assets such as Bitcoin and Ethereum have been particularly affected, but this is just the tip of the iceberg. What really happened and what are the reasons for this descent into hell?
Cryptocurrencies in free fall from the early hours of this Tuesday
The early hours of this Tuesday were particularly difficult for the cryptocurrency marketwho suffered a brutal correction, causing significant losses for major digital assets. Bitcoin (BTC), the largest cryptocurrency by market capitalization, saw its price fall below the $66,000 mark, erasing gains from previous trading sessions.
Likewise, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, plummeted to $3,400, reversing the progress made in the previous week. Even Altcoins were not spared from this wave of selling. Dogecoin (DOGE) and Solana (SOL) have seen drops of nearly 9% in 24 hours, illustrating the heightened volatility that characterizes this market.
The figures are equally alarming for other cryptocurrencies. Binance’s TON and BNB also felt the impact of this decline, although BNB held up better with a limited decline of 1.5%. At the same time, a significant reduction in Bitcoin positions held by US-listed asset managers was observed. In total, nine asset managers reduced their holdings by 3,169 BTC, or approximately $208 million. Among the most important vendors were mentioned prestigious names such as Fidelity and Grayscale. These two managers reduced their positions by 1,224 BTC and 936 BTC respectively.
Why is the cryptocurrency market collapsing?
Several factors have contributed to this sharp decline in the cryptocurrency market. Profit-taking by investors is one of the main causes of this decline, as they seek to secure their profits after a period of bullishness. Additionally, net outflows from Bitcoin ETFs in the United States have increased downward pressure on the market. Another critical factor was the strengthening of the US dollar, triggered by political uncertainty following French President Emmanuel Macron’s surprise decision to call early elections. This situation pushed traders to turn to the dollar, thus weakening the price of Bitcoin, which traditionally has an inverse correlation with the US currency.
Recent speeches by US Federal Reserve (FED) officials have also weighed on the cryptocurrency market. Fed Chair Jerome Powell struck a tougher tone, signaling limited interest rate increases for 2024, which dampened investor enthusiasm for risky assets like cryptocurrencies. At the same time, massive liquidations were observed, with $245 million of positions liquidated in 12 hours, including $225 million in long positions, increasing selling pressure.
This price drop has various implications for the cryptocurrency market. On the one hand, it reflects the market’s greater sensitivity to macroeconomic factors and institutional capital movements. On the other hand, some analysts see this correction as a buying opportunity, especially for altcoins which are testing key support levels. The current trend shows that the cryptocurrency market may continue to fluctuate based on global economic developments and monetary policies. Investors should remain cautious and monitor for signs of recovery or further declines.
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Luc Jose A.
Graduated in Science Po Tolosa and holder of a blockchain certification consultant issued by Alyra, I returned to participate in Cointribune in 2019. Capturing the potential of blockchain to transform numerous sectors of the economy, I have made a commitment to raise awareness and inform the great public about this constantly evolving ecosystem. My goal is to allow anyone to better understand blockchain and learn about the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to convey the latest technological innovations and to put into perspective the economic and social efforts of this revolution in brands.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.