The cryptocurrency market is experiencing a brutal correction, with Bitcoin (BTC) leading the charge downward. In the past 24 hours, BTC has plunged 8%, erasing weekly gains and triggering a sell-off across the board.
Sharpest Fall in 2024: Bitcoin Tumbles, Crypto Market Cap Crashes 7%
Bitcoin’s price plummeted from a high of $73,000 on Thursday to a low of $65,800 early Friday before a slight rebound. This 8% drop wiped out weekly gains and sent shockwaves through the crypto ecosystem.
Ether, Altcoins Feel the Squeeze
The pain wasn’t limited to Bitcoin. Ethereum (ETH), Cardano’s ADA, BNB Chain’s BNB, and XRP all witnessed similar losses. Memecoins, known for their volatility, took a harder hit, with Dogecoin (DOGE) and Shiba Inu (SHIB) dropping by 13%. Notably, Solana (SOL) was the lone bright spot, managing a 1% gain since Thursday.
The sell-off appears to be triggered by the release of the February Producer Price Index (PPI) data in the US. The PPI came in at 0.6%, exceeding expectations and doubling the rate recorded in January. This has doused investor hopes of a potential interest rate cut by the Federal Reserve in May, leading to a risk-off sentiment in the market.
Liquidations Exacerbate Downturn
Data reveals a significant rise in liquidations, further aggravating the downward spiral. Crypto-tracked futures suffered over $800 million in losses, marking the second-largest single-day figure in 2024. Long positions, betting on rising prices, were hit the hardest, with an estimated $660 million in liquidations. Liquidation occurs when an exchange forces a leveraged trade to close due to insufficient margin to cover losses.
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Further Correction or Rebound?
Some analysts warn of potential for even lower prices before a recovery. Alex Kuptsikevich, Senior Market Analyst at FxPro, believes the recent surge to new historical highs triggered profit-taking by investors. He raises questions about the presence of new buyers at current levels and suggests a potential correction.
Kuptsikevich further points to key support areas around $65,000-$65,500 and $60,000-$60,500. These levels hold significance for retail investors and coincide with Fibonacci retracement lines, a technical indicator used to identify potential support and resistance zones.
The crypto market remains in a state of flux. Whether this marks the beginning of a deeper correction or a temporary setback remains to be seen. In the coming days, investors should closely monitor price movements and economic news for further clues.
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