- Over 7% decrease in global crypto market cap, with significant losses in major and meme cryptocurrencies.
- Strong economic indicators lead to revised Fed rate cut expectations, impacting investor sentiment and crypto market trends.
There has been a notable decline in the global cryptocurrency market recently, with its entire market capitalization falling to $2.55 trillion, a decrease of more than 7%.
This marked a pronounced decline, impacting leading cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), which both experienced drops of more than 7%.
Other well-known cryptocurrencies like BNB, XRP, and Cardano (ADA) were also affected by the decline and suffered significant losses. Even meme currencies, such as Dogecoin (DOGE) and Shiba Inu (SHIB), which have seen a sharp increase in popularity, suffered significant losses, with drops of about 12%.
Unlike the altcoins above, the Solana (SOL) crypto is still moving north, as previously reported by ETHNews.
Factors Influencing the Decline of Bitcoin and Major AltcoinsÂ
Volatility Triggered by Options Expiry
The market’s volatility was mostly caused by a large number of Ethereum and Bitcoin options, which were worth a combined total of over $3 billion, expiring. It is well known that market volatility will occur when $2.09 billion in Bitcoin options and $1.24 billion in Ethereum options expire. In spite of the overall positive mood, traders took large profits as a result of this development.
Impact of Economic Indicators
The dynamics of the Bitcoin market are becoming more and more entwined with fiscal policy and larger economic indicators. Recent information indicating higher-than-expected retail sales, unemployment, and inflation rates points to the US economy’s ongoing resilience.
The US Federal Reserve’s interest rate policies have been repositioned in light of this robustness, which has dashed expectations for rate decreases in the near future. Additionally, investor sentiment in the cryptocurrency space has been further impacted by the strengthening of the US dollar index and an increase in Treasury yields.
Market Liquidations and Reduced ETF Inflows Intensify Declines
Furthermore, the market saw pressure from over $680 billion in liquidations, which affected over 192,000 dealers. This was mostly because of a lack of liquidity.
For bold investors, this has created a clear ‘buy-the-dip’ opportunity. At the same time, U.S. Spot Bitcoin ETF inflows declined noticeably, falling 80.6% to $133 million on Thursday, indicating a collapse in investor confidence. The following video has taken a deeper look at this development, giving you more insight.
Outlook for the Future Market
The state of the market presents both opportunities and cautions despite the current difficulties. Some investors continue to find value in the tactic of “buying the dip” during market downturns, especially when historical patterns like as the rallies preceding the Bitcoin halving are taken into account.
As a result of upcoming policy choices and economic reports, investors may need to prepare for increased volatility in the future due to the intricate relationship between developments in the cryptocurrency market and broader economic indicators.