The crypto market is collapsing: Bitcoin and ether in free fall!

A new storm is shaking the cryptocurrency market! Known for its volatility, the crypto market has once again surprised investors with a significant decline. Hot assets like bitcoin and ether have been particularly hard hit, but that's just the tip of the iceberg. What really happened and what are the reasons behind this descent into hell?

Cryptocurrencies in free fall from dawn this Tuesday

The first hours of the day on Tuesday were particularly difficult for the cryptocurrency market, which suffered a brutal correction, leading to significant losses for major digital assets. Bitcoin (BTC), the largest crypto by market capitalization, saw its price fall below $66,000, erasing gains recorded in previous trading sessions.

For its part, ether (ETH), the second most capitalized crypto, plunged to $3,400, reversing the progress made the previous week. Altcoins were not spared from this wave of selling. Dogecoin (DOGE) and Solana (SOL) saw declines of nearly 9% in the span of 24 hours, illustrating the increased volatility that characterizes this market.

The figures are just as alarming for other cryptos. TON and Binance's BNB also felt the impact of this drop, although BNB held up better with a decrease limited to 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 decreased their holdings by 3,169 BTC, or approximately $208 million. Prestigious names like Fidelity and Grayscale were cited among notable sellers. These two managers reduced their positions by 1,224 BTC and 936 BTC respectively.

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Why is the crypto market collapsing?

Several factors contributed to this sudden fall in the crypto market. Profit-taking by investors is one of the main causes of this decline, as they seek to secure their gains after a period of increase. Additionally, net outflows from Bitcoin ETFs in the United States have added further downward pressure to the market. Another driving factor was the strengthening of the US dollar, caused 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, traditionally in inverse correlation with the American currency.

Recent speeches from US Federal Reserve (FED) officials have also weighed on the crypto market. FED Chairman Jerome Powell struck a stricter tone, signaling limited interest rate hikes for 2024, dampening investor enthusiasm for risky assets like cryptos. At the same time, massive liquidations were observed, with $245 million in positions liquidated in 12 hours, including $225 million in long positions, thus increasing selling pressure.

This price drop has varied implications for the crypto market. On the one hand, it reflects the increased sensitivity of the market to macroeconomic factors and institutional capital movements. On the other hand, some analysts see this correction as a buying opportunity, especially for altcoins that are testing key support levels. The current trend shows that the crypto market could continue to oscillate depending on global economic developments and monetary policies. Investors should remain cautious and watch for signals of recovery or further declines.

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