What is the reason behind today’s cryptocurrency market crash?
Key Highlights
In the past 24 hours, there have been significant crypto liquidations, primarily involving long traders.
Crypto traders are seeking refuge in stablecoin markets in anticipation of high-impact news from the United States.
Crypto analysts predict that the Bitcoin rally will continue due to the upcoming halving and increased institutional demand.
Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) have experienced substantial losses in the cryptocurrency market over the past 24 hours, following a profitable February. Coingecko and Coinmarketcap, backed by Binance, report that the total global cryptocurrency market capitalization has decreased by approximately 7.7 percent to around $2.5 trillion during the early London trading session on Tuesday.
As a result of heightened cryptocurrency volatility, over $526 million has been liquidated in the past 24 hours, with long traders accounting for over $442 million of these liquidations.
On Bitcoin’s USD derivative daily chart, there are already indications of short-term weakness as the instrument dropped below the support range of $64,500 to $65,266 in the past 24 hours. Consequently, the next few weeks are likely to be turbulent for Bitcoin and the entire crypto market.
Top Reasons for the Crypto Market Decline Today
Pre-FOMC Risk-Off
On Wednesday, the United States Federal Reserve is set to release the highly anticipated benchmark interest rates following two consecutive Consumer Price Index (CPI) data releases showing concerning inflation levels. Economists predict that the Fed will maintain the 5.50 percent interest rate without any reduction.
However, there are many uncertainties as the Fed commissioners lack confidence in raising interest rates. Consequently, cryptocurrency traders are reducing their risk exposure to avoid forced liquidations.
Pre-Halving Healthy Market
After experiencing significant profits in recent months, driven by the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States, it was expected that the market would go through a cooling period to ensure a healthy market correction.
According to well-known crypto analyst Ali Martinez, Bitcoin’s price is likely to find solid support at around $61,100 in the coming weeks. In a sustained sell-off, the analyst believes that the support range of $51,530 to $56,685 will hold.
Altcoin and Meme Coin Risk Reduction
The altcoin market and the meme coin industry have recently seen significant gains. The rise of new meme coins has led to profit-taking, which has contributed to the sell-off in the cryptocurrency market.
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