Markets
Bitcoin and Ether in free fall!
Tue June 18, 2024 ▪ 4 min reading ▪ by Luc Jose A.
A new storm is shaking the cryptocurrency market! Known for its volatility, the crypto market once again surprised investors with a significant drop. Key assets like Bitcoin and Ethereum have been particularly hard hit, but that’s just the tip of the iceberg. What really happened and what are the reasons for this descent into hell?
Cryptocurrencies in free fall from the early hours of this Tuesday
The early hours of this Tuesday were particularly difficult for the cryptocurrency marketwho 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 from previous trading sessions.
Likewise, Ethereum (ETH), the second-largest crypto by market capitalization, plunged to $3,400, reversing progress made the previous week. Altcoins were also not spared from this wave of sales. Dogecoin (DOGE) and Solana (SOL) saw declines of nearly 9% in 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 limited drop of 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 reduced 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.
Why is the crypto market crashing?
Several factors contributed to this sharp decline in the cryptocurrency 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 increased downward pressure on the market. Another crucial factor was the strengthening of the US dollar, triggered by political uncertainty following French President Emmanuel Macron’s surprise decision to call early elections. This situation pushed traders to turn to the dollar, thereby weakening the price of Bitcoin, which traditionally has an inverse correlation with the American currency.
Recent speeches by officials of the American Federal Reserve (FED) have also weighed on the cryptocurrency market. FED Chairman Jerome Powell struck a stricter tone, signaling limited interest rate hikes for 2024, dampening investor enthusiasm for risky assets like cryptos. Simultaneously, massive liquidations were observed, with $245 million in positions liquidated in 12 hours, including $225 million in long positions, increasing selling pressure.
This price drop has various implications for the crypto market. On the one hand, this reflects the market’s increased sensitivity to macroeconomic factors and institutional capital movements. On the other hand, some analysts see this correction as a buying opportunity, particularly for altcoins which are testing key support levels. The current trend shows that the crypto market could continue to fluctuate 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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Luc José A.
A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this ongoing revolution.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.