Risk-off sentiment intensifies, triggering a new round of sell-off in the crypto market
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Risk-off sentiment intensifies, triggering a new round of sell-off in the crypto market
As Bitcoin weakens, the altcoin market continues to decline.
Navigating Web3 tides with focused insightsBy Mary Liu, Bitpush News
Bitcoin extended its losses on Tuesday, dropping over $10,000 from last week's all-time high to a session low of $62,320.30. According to Bitpush terminal data, BTC pared some losses by the end of U.S. trading hours, hovering around $64,000 with a 24-hour decline of approximately 5%.
Amid Bitcoin's weakness, the altcoin market continued to fall, with Ethereum down over 4%, closing at $3,335.66, SOL shedding 8%, and Dogecoin falling 5%. Most tokens within the top 200 recorded losses on Tuesday, with only six achieving double-digit gains.
DeFi protocol Ondo (ONDO) led the gains with a 14.5% rise, followed by Fantom (FTM) up 14.3% and Open Campus (EDU) gaining 11%. Raydium (RAY), a Solana-based DeFi protocol, and Mantra (OM), an Ethereum-based DeFi protocol, suffered the largest declines, falling 18.6% and 13.8% respectively, while Jupiter (JUP) dropped 12.9%.
Crypto-related stocks came under pressure, with MicroStrategy down 5% and cryptocurrency exchange Coinbase falling 4%. Crypto mining equities initially declined across the board but partially recovered later in the day. The two largest mining firms, Riot Platforms and Marathon Digital, ended the session down 3% and 0.5% respectively.
Bitcoin has been weakening since last week as some investors took profits. Data from CryptoQuant showed a significant increase on March 12 in the number of short-term holders selling Bitcoin for profit.
Additionally, profit-taking triggered a surge in long liquidations of leveraged Bitcoin positions. According to CoinGlass, long liquidations across centralized exchanges amounted to approximately $518 million in the past 24 hours, compared to $122 million the previous day and about $372 million from last Wednesday through Friday.
Bartosz Lipiński, CEO of Cube.Exchange, said: "As ETFs buy up available Bitcoin supply in public markets and continue reducing liquidity, such events may become more frequent, potentially leading to a loss of confidence in Bitcoin’s price integrity and prompting investors to look toward other crypto assets. Overall, this pullback is likely temporary, and a recovery rebound makes sense—though the shadow of a potential recession next year looms over the market and could suppress any rebound in ways we cannot foresee."
Analysts at Bitfinex stated in a report: "Given Bitcoin’s recent all-time highs and subsequent correction, we expect the market to enter a period of readjustment as investors seek equilibrium amid unprecedented inflows into spot Bitcoin ETFs."
Joel Kruger, market strategist at LMAX Group, said in an email report: "The Federal Reserve’s decision this week poses a risk, as strong U.S. economic data and inflation readings raise concerns about a less accommodative policy stance for investors. While correlations between cryptocurrencies and traditional assets remain low, risk-off sentiment stemming from the Fed’s decision could spill over into the crypto market."
Market analyst Bloodgood said in his latest market report: "With one month remaining until the Bitcoin halving, a pre-halving dip is certainly not surprising given Bitcoin’s recent performance. Meanwhile, all eyes are on tomorrow’s FOMC meeting, especially as the market appears to be scaling back expectations for rate cuts this year. While consensus on the current Fed rate decision is largely aligned—that rates will remain unchanged—any commentary on future monetary policy direction could send shockwaves through the market. This naturally means that holding leveraged positions during the press conference carries higher risk than usual."
The total cryptocurrency market capitalization currently stands at $2.39 trillion, with Bitcoin accounting for 52% of the market cap dominance.
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