Why are cryptocurrencies falling today? BTC Price Below $63,000 Amid Market Pressure, Trader Liquidations

TLDR

• The price of Bitcoin fell below $63,000, reaching a low of $62,500.
• Over 60,000 traders were liquidated, with losses exceeding $130 million.
• Factors contributing to the decline include decreased whale trading, withdrawals from derivatives exchanges and outflows from spot ETFs.
• Altcoins also suffered significant losses, with some falling 4% or more.
• The market is facing pressure from a strong dollar and the anticipation of upcoming PCE inflation data.

The cryptocurrency market suffered a significant decline on Monday, June 24, 2024. while the price of Bitcoin collapsed below the $63,000 threshold. This sudden drop led to the liquidation of over 60,000 traders and caused ripple effects throughout the crypto ecosystem.

Bitcoin, the world’s largest cryptocurrency by market capitalization, fell to a low of $62,634, marking its lowest point in several weeks.

The price drop resulted in traders losing more than $130 million in a single day. This sharp drop caught many by surprise, triggering a series of automatic liquidations on various trading platforms.

The recent price movement continues a downward trend that began last week. Bitcoin had reached a weekly high of $67,000 last Tuesday, but has been under constant bearish pressure since then. On Friday, the price had already fallen to $63,500, with a brief stabilization over the weekend around $64,000 before the significant drop on Monday.

Several factors appear to be contributing to this market correction.

1. One thing worth noting is the decrease in whale transactions. Over the past two days, large transactions decreased by 42%, from 17,091 to 9,923. This reduction in activity by major market players has likely contributed to the overall bearish sentiment.
2. There has been a wave of withdrawals from derivatives exchanges. Some traders have adopted a “risk averse” approach, reducing their exposure by moving assets away from these platforms. The Interexchange-Flow-Pulse (IFP) indicator, which tracks Bitcoin’s movements between spot and derivatives exchanges, turned red, signaling a decline in market sentiment.
3. Another factor putting pressure on the price of Bitcoin is the outflow from spot exchange-traded funds (ETFs). The previous week saw substantial withdrawals from these investment vehicles, contributing to the market’s overall bearish trend.
4. The broader economic environment is also playing a role in Bitcoin’s price movement. TThe cryptocurrency market is facing pressure from the strong U.S. dollar, which neared a two-month high following robust U.S. Purchasing Managers’ Index data. This dollar strength has made alternative assets like cryptocurrencies less attractive to some investors.

The market is anticipating key Personal Consumption Expenditures (PCE) price index data, which will be released on Friday.

This inflation indicator is closely monitored by the Federal Reserve and could influence future interest rate decisions. While upcoming data is expected to show inflation cooling slightly, it is still likely to remain above the Fed’s 2% annual target, potentially giving the central bank more reason to keep interest rates high.

High interest rates generally have a negative impact on speculative assets such as cryptocurrencies, as they reduce the attractiveness of these investments compared to more traditional interest-earning options.

The effects of this market downturn were not limited to Bitcoin. Altcoins, or alternative cryptocurrencies, have also suffered significant losses. Ethereum, the second-largest cryptocurrency, fell 4.2% to $3,366.81, hitting a one-month low. Other major altcoins like XRP, Cardan (ADA)AND Solana (SOL) they recorded decreases of 3.3%, 4.3% and 7.4%, respectively.

Meme-inspired cryptocurrencies have not been spared from the market turmoil. Dogecoin (DOGE) AND Shiba Inu (SHIB) they recorded declines of 4.7% and 5.8%, respectively.

The current market situation has led to growing skepticism among traders regarding the timing of potential interest rate cuts by the Federal Reserve. This sentiment is unlikely to improve significantly in the near term, especially with the upcoming release of PCE data.

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