Altcoins
Experts Reveal Real Reasons for Sudden Bitcoin and Crypto Market Crash
The crypto market saw a sudden drop on Tuesday, causing the global crypto market cap to drop by over 4%, from $2.64 trillion to a low of $2.5 trillion. Bitcoin (BTC) and Ethereum (ETH) Price fell 5% in a matter of hours, triggering a market-wide sell-off.
Altcoins including Solana (SOL), BNB, XRP and Cardano (ADA) also fell, while prices of meme coins Dogecoin (DOGE) and Shiba Inu (SHIB) failed to hold up and fell by more than 8%. Weak market sentiment continues since the crypto market experienced its largest on record. options expiration. Analysts believe this is a pre-halving market correction, similar to other pre-halving corrections seen historically, as reported by CoinGape.
Experts reveal why the crypto market fell
QCP Capital found that the options market provided early signals of a sharp decline, particularly the downward trend in risk reversals. Bitcoin and Ethereum options volatility remained high, with selling pressure increasing amid low sentiment.
BTC Price broke $70,000 and traded below $66,000 and ETH traded as low as $3,320. However, the sudden drop is due to large liquidations on crypto exchanges with high retail investor participation, such as Binance, which saw perpetual funding rates fall from a flat 77%.
This brings spot prices back to the $63,000 risk levels seen in mid-March. With a drop in trading volumes signaling a further drop in prices.
“Although investor funding has contracted, the rest of the forward curve remains very high. Will this be the movement that brings the whole curve back down? », asks QCP Capital.
Matrix port further questioned the crypto market’s bullish trend after today’s intraday correction. This highlights that Bitcoin has been struggling, as some argue this is due to the typical halving before the halving, while others claim this is happening due to the reassessment of bitcoin rate expectations. American interest.
Change machine data shows that more than $500 million has been liquidated across the world. crypto market in the middle of this strong correction. Of these, $414 million of long positions were liquidated and $85 million of short positions were liquidated in the last 24 hours.
Over 139,000 traders were liquidated and the largest liquidation order took place on crypto exchange OKX as someone swapped ETH for USD worth $7.48 million.
10x Search has disclosed an urgent update to its clients that Bitcoin and Ethereum are surpassing crucial support levels. Best analyst Markus Thielen, CEO of 10x Research, earlier warned that Bitcoin price could rise if it stays above the $68,330 level. However, the critical level was crossed and the market failed to recover the price level.
He added that “Some growth and inflation data was also stronger, which could lead to a reassessment of expectations for interest rate cuts. Crypto might be quicker than other asset classes to recognize this.
Will the price of Bitcoin recover?
Analysts and the market were already aware of the key level and this is what caused cryptocurrency prices to plummet.
Monday, crypto analyst Ali Martinez re-warned investors about the critical support level at $68,300, highlighting that a breakout could trigger a downward spiral towards the $65,250-$63,150 range. Notably, this range, where 760,000 wallets hold 520,000 BTC, presents an important psychological threshold for Bitcoin’s trajectory.
BTC price is still preparing to hit $100,000 in this bull market. Bitcoin closed up 64% in the first quarter over the past three years, Kaiko reported. Also, Spot Bitcoin ETF capital inflows are expected to rebound soon after low inflows.
Macro Factors Affecting Bitcoin
On a macroeconomic level, the US dollar index (DXY) stood at 105, the highest level since mid-February, as traders anticipated major U.S. economic indicators due this week. Traders reduced their bets as the Fed eased monetary policy in June after stronger-than-expected manufacturing ISM.
Additionally, the 10-year U.S. Treasury yield rose to 4.341%, its highest level since the start of the year after hot PCE data dampened optimism about the Fed’s first rate cuts.
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