18 February Crypto Bloodbath: Key Reasons Behind the Market Meltdown
On February 18, the overall market capitalization of cryptocurrencies fell by 2.27% to almost $3.16 trillion, indicating a severe decline in the sector. Although the cryptocurrency industry is known for its volatility, several significant variables, such as extensive liquidations, a risk-off attitude among investors, and deteriorating technical indicators, have led to this most recent downturn.
Solana Suffers $29.75M Liquidations as Crypto Market Bleeds!
The recent market decline started on February 15 after the LIBRA memecoin, which Argentina’s President Javier Milei had supported, was pulled. This incident worsened the already negative sentiment in the market and resulted in large losses for investors. As of February 18, major cryptocurrencies, including Solana, Bitcoin, Ethereum, and XRP, have been losing ground in the sell-off.
More than $280 million in leveraged cryptocurrency holdings have been wiped out as a result of the slump and the ensuing wave of liquidations. The largest impact has been felt by long SOL positions, which saw $29.75 million liquidated, more than the $21.4 million liquidated in BTC positions.
Crypto Investment Exodus: $415M Outflows Signal Institutional Fear!
Massive withdrawals from cryptocurrency investment products coincide with the present market drop, indicating a change in institutional sentiment. According to CoinShares, digital asset investment products saw their first significant outflows of $415 million in the week ending February 14, ending a 19-week inflow streak. The biggest withdrawals, totaling $430 million, were from Bitcoin. Last week, the total amount of inflows for cryptocurrency investment products fell from $7.4 billion to $6.9 billion.
James Butterfill, Head of Research at CoinShares, claims that the Fed’s hawkish posture and worries about U.S. inflation figures are to blame for these withdrawals. Hopes for further rate decreases in 2025 were dashed when the Consumer Price Index (CPI) for January surpassed forecasts. With the earliest possible rate drop anticipated in July, there is currently a 97.5% chance that the Fed will hold interest rates at the next FOMC meeting on March 19.
Cryptocurrency Market Faces Key Resistance at $3.3 Trillion Amid RSI Decline
Technical resistance levels that have prevented further upward movement have also contributed to the market’s downward trajectory. The 50-day and 100-day simple moving averages (SMAs), which indicate the total value of all cryptocurrencies, are convergent at $3.3 trillion, a critical resistance zone that is now below the TOTAL market cap.
Continued negative potential is indicated by the Relative Strength Index (RSI), which dropped from 75 (overbought) on January 17 to 40. Since February 6, $3.03 trillion has been a crucial support level, and if selling pressure persists, the market value might drop even lower. On the other hand, the market cap might surpass $3.2 trillion if buying pressure returns, with $3.3 trillion serving as the next significant resistance.
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