Key Takeaways:
Bitcoin (BTC) is currently experiencing an intense downward price pressure that has seen it struggle to cross the $70,000 mark. The drawdown is adversely affecting alternate cryptocurrencies.
Bitcoin and Altcoins Struggle as Marketwide Liquidations Hit $93 Million in One Day
While BTC dropped by 2.6% to trade at a 24-hour low of $67,908, major altcoins like Ethereum (ETH) and Solana (SOL) dropped by 3.7% and 1.59% to $3,551 and $159.45 respectively. Binance Coin (BNB), which recently recorded a new all-time high, fell by 7.3% to currently trade at $618.93.
This power struggle has led to the combined crypto market liquidation topping $93.68 million over a single trading day. Bitcoin leads the chart with more than $14.59 million worth of tokens liquidated, followed by Ethereum (ETH) and Solana (SOL) with liquidations of $12.3 million and $4.2 million respectively.
Liquidations are part of the market dynamics and occur when traders adopt leveraged trading strategies. However, unlike in the past, the combined market liquidation is growing this time, leaving experts to figure out the underlying reason for this high market volatility.
Market Rebound a Possibility as US Federal Reserve is Expected to Announce Rate Cuts
The current market condition is to not prolong as the US Federal Reserve is expected to announce a rate cut following its two-day policy meeting, which could trigger a rebound for BTC price.
Other global central banks, including the Bank of Canada, the European Central Bank, and the National Bank of Denmark already reduced borrowing interest rates on their respective currencies last week.
These cuts are critical for risk assets such as Bitcoin as lowered interest rates in major financial markets could attract institutional investors to the digital asset. One gateway created for these investors has been the introduction of spot Bitcoin exchange-traded fund (ETF) offerings.
Institutional investors from the United States, United Kingdom, Australia, Hong Kong, and Thailand are showing increased interest in Bitcoin and other crypto assets. They are supporting its growth in a way to enhance its investment appeal.
Crypto and Mining Stocks Showing Signs of Life
Crypto stocks, which recorded massive inflows during the first quarter, saw exits this past week as market sentiment weakened. These stocks fell alongside the wider crypto market following the release of the US job data that showed a 4% increase in unemployment in April.
However, the Fed’s policy meeting has managed to lift tech and crypto stocks back into the green zone. Leading cryptocurrency exchange Coinbase (COIN) is trading at $241.81 – up 2.1% today. The stock has managed to post weekly gains of 8%, clearing out previous losses.
Business intelligence firm MicroStrategy (MSTR), which is one of the largest corporate holders of Bitcoin, has managed to break out of the red zone to trade at $1,599 – up 0.25% over the last 24 hours.
Stocks of Bitcoin mining companies saw a positive change in sentiment as inflows increased today. Marathon Digital (MARA) posted a 1% gain while Canadian miner Hut 8 is up 1.8% for the day. One reason why mining stocks are performing better than other crypto stocks is because of the gains they made when the price of BTC pierced above $71,500.
The entire market has set its sights on the upcoming Federal Open Market Committee (FOMC) meeting happening this week, where the Fed is expected to announce whether it will be initiating a rate cut on the dollar. The decision will depend on better-than-expected jobs reports and unemployment rates in the US over the last month.
Analysts at JPMorgan and Citibank have pushed back their predictions for a rate cut in July as they believe it would only come later in the year, probably between September and November.
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