The cryptocurrency market experienced a significant selloff, with Bitcoin, Ethereum, and various altcoins witnessing notable price declines. This downturn has caused concern among investors and analysts alike, as several key factors have contributed to the current market scenario.
Crypto Market Selloff: What Triggered the Decline?
The recent selloff in the crypto market saw Bitcoin's price fall to $62,000, triggering a cascading effect on Ethereum and other altcoins. The overall market capitalization tumbled from $2.35 trillion to $2.26 trillion within 24 hours, resulting in a loss of $160 billion in net wealth for crypto investors over the past week.
Several factors have been identified as triggers for this selloff:
PCE Inflation Data and Market Expectations The anticipation of the U.S. Personal Consumption Expenditures (PCE) inflation data has created uncertainty among investors. The PCE data is a crucial indicator of inflation and is closely watched by the Federal Reserve. A higher-than-expected inflation rate could lead to a tightening of monetary policy, which negatively impacts risk assets, including cryptocurrencies.
Monthly Options Expiry The monthly options expiry is another significant event influencing the crypto market. The expiry of over 105,000 Bitcoin options, with a notional value of $6.72 billion, has added to the market's volatility. The put-call ratio of 0.52 and the max pain point at $57,000 suggest that Bitcoin's price may remain under pressure.
Bitcoin Double Top Pattern Technical analysis indicates the formation of a double top pattern for Bitcoin, which is typically a bearish signal. Analysts predict that this pattern could push Bitcoin's price down to $50,000, exacerbating the selloff.
Impact on Ethereum and Altcoins During the Crypto Market Selloff
The price of Ethereum has also seen a significant drop, tumbling 4% in the last 24 hours and over 10% for the month. Currently trading at $3,366, Ethereum's trading volume has surged by 73% as investors liquidate their holdings.
Other altcoins, including Solana, XRP, Toncoin, Dogecoin, Cardano, and Shiba Inu, have also experienced declines ranging from 3% to 6%. Meme coins and AI coins have been particularly hard-hit, leading the correction in the broader crypto market.
Crypto Market Selloff Nears Crash: Traders Brace for Macro Events
According to Coinglass data, the liquidation of popular cryptocurrencies amounted to $170 million, with $127 million liquidated in the last 12 hours alone. Over 70,000 traders were liquidated, with the largest single order on BitMEX involving $10 million worth of XBTUSD.
Factors Influencing the Crypto Market Selloff Sentiment
Whale Activity Bitcoin whale transactions worth $100,000 or more have significantly decreased by 42% over the past two days. This decline in large transactions indicates reduced activity from major holders, adding to the bearish sentiment.
Geopolitical Risks Geopolitical tensions, particularly the security pact between Russia and North Korea, have raised concerns about further escalation, influencing market sentiment. Additionally, political uncertainty in Europe ahead of the French election has also impacted the market.
Future Outlook Amid the Crypto Market Selloff
Investors are closely monitoring upcoming macroeconomic events that could further influence the crypto market. Key events include the release of U.S. PCE inflation data, ISM manufacturing data, Fed Chair Powell's speech, the FOMC meeting release, and jobs and unemployment rate data in early July.
The combination of these factors has created a challenging environment for the cryptocurrency market. While the current sentiment remains cautious, the market's reaction to these macroeconomic events will be crucial in determining the next direction for Bitcoin, Ethereum, and other altcoins.
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