25 February Crypto Bloodbath: Is the Worst Yet to Come?
Due to a lack of market optimism, a widespread sell-off that began on Monday continued into Tuesday. Major cryptocurrencies dropped as high as 7.03% in the last day due to the lack of tangible catalysts to improve sentiment. While Dogecoin (DOGE), XRP (XRP), and Ether (ETH) all had declines of over 10%, Solana’s SOL plunged 12.95%, extending the seven-day losses to over 16%.
Bitcoin, Ethereum, and Solana shouldn’t be trading this far below their all time highs. On the U.S. side, inflation concerns and a pause in Fed rate cuts have kept markets down, but this could change as weak economic data released last week could spur Fed officials to take further action.
Jeff Mei, COO at crypto exchange BTSE
Bitcoin Faces Key Test as Macro Uncertainty Clouds Market Sentiment
Bitcoin threatened a possible downside breach of the multi-week consolidation between $90,000 and $110,000 when it fell below the $92,000 mark for the first time since late November. In order to sustain market growth, traders said macroeconomic decisions were crucial and that the current gloomy attitude might be exaggerated. The same was said by SignalPlus’s head of insights, Augustine Fan.
The ‘slowdown’ narrative will likely dominate the narrative in the near term, with stocks and bonds trading back in positive tandem with correlation nearing the highs of the past 12 months.
Fan
Fan clarified that as markets shift their focus back to Fed eases, the bad data is now good once more, which will soon give gold and Bitcoin tailwinds.
Rising CPI Sparks Market Uncertainty: How Will Bitcoin React?
The carefully watched Consumer Price Index (CPI) rose by 0.5% month over month in January, which was much more than the predicted 0.3% gain, according to statistics released early this month. Until there were clear signs that the government would step in to boost the economy, this led investors to switch to cash holdings or risk-off bets.
Urban consumers’ average price changes over time for a market basket of goods and services are measured by the U.S. CPI. Since investors see the asset class as a hedge against inflation, changes in CPI readings typically have an effect on Bitcoin and the larger cryptocurrency market.
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