Bitcoin BTC/USD on Friday plummeted approximately 10% to a preliminary low of $92,250, influenced by the Federal Reserve’s recent “hawkish” 0.25% rate cut and a combination of profit-taking and technical market forces, according to industry experts.
Ethereum ETH/USD has followed Bitcoin down, falling 16% to $3,115.
Ripple XRP/USD has seen an 18% drop, and BNB BNB/USD is down 12% at $618.
Among the smaller altcoins, Dogecoin DOGE/USD has crashed by 28%, with Shiba Inu SHIB/USD and SUI SUI/USD each losing about 25% of their value over the last 24 hours.
Speaking with Benzinga, Forest Bai, Co-founder of Foresight Ventures, attributes this downturn to the Federal Reserve’s hawkish stance and reduced expectations for future rate cuts, which have tightened macro liquidity.
“Bitcoin's recent pullback marks the first significant market adjustment since the post-U.S. election euphoria,” Bai stated, highlighting that such 20% corrections are typical in bull markets, offering a consolidation rather than a trend reversal.
Despite the short-term volatility, Bai remains optimistic due to robust institutional inflows and on-chain data showing long-term holders capitalizing on liquidity to realize gains, with $2.1 billion in profits recorded.
However, the market dynamics aren’t just about monetary policy but also about investor behavior.
Raj Kapoor from the Blockchain Governance Council told Benzinga that the recent rate cut, although anticipated, has had a profound effect on speculative assets like cryptocurrencies.
“The crypto crash isn't merely a tale of plummeting numbers but a series of interconnected forces,” Kapoor explains, pointing to profit-taking and panic selling, exacerbated by technical analysis indicating mean reversion and the Wyckoff Method phases.
Despite the downturn, he sees potential recovery signals with Bitcoin’s cup-and-handle pattern, suggesting a future rally to $120,000, though he cautions about the possibility of further declines before a true recovery.
Alex Kuptsikevich, chief market analyst at FxPro, provides a grim outlook on the market’s trajectory, with the total crypto market cap losing 4.4% to $3.36 trillion in the last 24 hours, down over 11% from its peak.
“Bitcoin is back below $100K, getting support at $96K on Friday morning,” he told Benzinga in a note, adding that a break below $94.5K could signal further bearish trends.
The crypto market has liquidated $1.38 billion in the last day, with a significant $1.21 billion from long positions, indicating a sharp correction, according to data from CoinGlass.
The current market scenario reflects a shift from speculative investments into areas like real-world asset tokenization and decentralized finance, as per Bai’s observations.
This transition, while indicative of market maturation, has left Bitcoin and many altcoins vulnerable.
Despite these immediate challenges, the experts agree that the resilience of Bitcoin, still holding above critical psychological levels, combined with ongoing institutional interest and bullish medium-term market sentiment, suggest that this crash might be a temporary setback in a longer bull cycle.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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