The cryptocurrency market experienced a significant pullback, with leading assets like Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE) encountering bearish trends. Early trading hours saw Bitcoin surpass the $91,000 mark, but it later retreated to approximately $88,000 by market close. This represents a decline of over 2% within the last 24 hours, although the weekly performance remains robust with gains exceeding 15%. This decline underscores a short-term market correction following a strong rally.
Ethereum, the second-largest cryptocurrency by market capitalization, saw its value drop from $3,240 to about $3,080 over the course of the day. Despite this intraday drop, Ethereum still recorded a weekly increase of 3.8%, albeit significantly trailing behind Bitcoin’s performance. The recent downturn in Ethereum’s price can be attributed to profit-taking and market participants adjusting their positions amidst fluctuating sentiment in the broader crypto space.
Other Notable Cryptocurrencies: Dogecoin and other altcoins also faced pressure. Dogecoin, currently trading around $0.088, saw minimal movement but maintained its position among the top 10 cryptocurrencies by market cap. Similarly, Solana (SOL) and Binance Coin (BNB) faced slight corrections, reflective of the broader market sentiment.
The heightened volatility led to substantial liquidations across the market. Data indicates that over $505 million worth of positions were liquidated in the past 24 hours, with long positions being the hardest hit, accounting for roughly $350 million. The surge in liquidations, particularly in leveraged long bets, signals that many traders were caught off guard by the abrupt price swings, resulting in forced sell-offs.
Bitcoin’s Open Interest (OI) in the derivatives market fell by 0.82%, a sign that traders are scaling back on their leveraged positions. A simultaneous decline in spot prices and OI typically suggests long liquidations, indicating a shift in market sentiment from bullish to cautious as traders recalibrate their strategies.
Despite the sharp movements, the overall sentiment in the crypto market remains optimistic, albeit with a more cautious tone. The Cryptocurrency Fear and Greed Index, which measures market sentiment on a scale from 0 (Extreme Fear) to 100 (Extreme Greed), saw a decrease from 88 (Extreme Greed) to 80. This shift reflects growing caution among traders who are still bullish but wary of potential short-term corrections.
Besides Bitcoin, Doge, ETH, stocks are also affected by the FED
The crypto market’s recent downturn coincided with a red day in the U.S. stock market, highlighting the interconnectedness of global financial markets. On Thursday, the Dow Jones Industrial Average fell by 207.33 points (0.47%), closing at 43,750.86. The S&P 500 dropped 0.60% to end at 5,949.17, while the tech-heavy Nasdaq Composite declined 0.64%, settling at 19,107.65. This marked the third consecutive losing session for the Nasdaq, driven by concerns over tech valuations amidst rising interest rates.
As we approach the end of 2024, the markets are likely to remain volatile, influenced by central bank policies, geopolitical developments, and year-end profit-taking activities. Analysts predict that while the crypto market may face short-term corrections, the broader adoption of digital assets and technological advancements could drive a new wave of growth in 2025.
Federal Reserve Chair Jerome Powell’s recent comments played a significant role in dampening market optimism. Powell emphasized that the Fed is not in a hurry to cut interest rates despite the resilient economic indicators, such as strong GDP growth and a robust labor market. This led to a recalibration of market expectations, with the probability of a rate cut at the upcoming FOMC meeting dropping from 82% to 59%, as tracked by the CME FedWatch Tool.
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