The crypto market is crashing today, with Bitcoin and most altcoins being in the red. Bitcoin is in a deep correction after falling by over 15% from its highest point this year.
Other top cryptocurrencies like Virtuals Protocol (VIRTUAL), SPX6900 (SPX), Aerodrome Finance (AERO), Sei (SEI), and Optimism (OP) falling by over 10% in the last 24 hours.
Notably, the ongoing crypto market crash seems like an isolated situation as American and European stocks have soared. Futures linked to the S&P 500 and Nasdaq 100 have all jumped by 25 and 165 points, respectively.
Top commodities like gold, silver, natural gas, and wheat were in the green, while American bond yields retreated.
Why the Crypto market is crashing today
The cryptocurrency industry is falling as investors remain concerned about the industry after last month’s crash, which triggered the biggest liquidation event.
Bitcoin and other cryptocurrencies tumbled on October 11 after Donald Trump threatened tariffs on Chinese goods. That crash led to a $20 billion wipeout, with over 1.6 million traders being liquidated.
A sense of fear normally remains in the market whenever there is such an event. Indeed, the latest data shows that the Crypto Fear and Greed Index has moved to the fear zone of 36.
Cryptocurrencies have struggled since that liquidation event happened in October, with any rebound facing substantial resistance.
The crypto market crash is also happening after the recent Federal Reserve interest rate decision. In a statement, the Federal Reserve decided to cut interest rates by 0.25% as most analysts were expecting.
However, the bank hinted that it may not cut interest rates in December as analysts were expecting. It is common for Bitcoin and other altcoins to drop whenever the Fed is hawkish.
The crypto market crash also happened as liquidations jumped on Monday. Data shows that these liquidations jumped by 317% on Monday to over $539 million.
Also, the long/short ratio is tilting on the bear side. According to CoinGlass, longs have a 47% ratio, while short investors were about 51%.
Meanwhile, the open interest has continued falling in the past few minutes, a sign that investors are deleveraging. Futures open interest dropped to $156 billion, down from the year-to-date high of over $300 billion.
Will crypto prices rebound?
Therefore, the most likely question is whether crypto prices will rebound in the near term.
Technical analysis suggests that the crypto market crash will continue in the coming weeks.
The most notable one is the fact that Bitcoin price has formed numerous bearish chart patterns on the daily chart. It has formed a death cross pattern on the daily chart as the 50-day and 200-day Exponential Moving Averages (EMA) have crossed each other.
Bitcoin price has also moved below the Ichimoku cloud and the Supertrend indicators, a sign that bears are in control for now.
Therefore, there is a likelihood that Bitcoin price will continue falling and possibly move below to the key support level at $100,000. A move below that level will point to more downside for Bitcoin and other cryptocurrencies.
Still, some potential catalysts may lead to more gains in the coming weeks. For example, there are signs that the Securities and Exchange Commission (SEC) will approve a series of ETFs like XRP and other top coins like BNB and Cardano. Such a move would likely boost the crypto market as it will lead to more demand.
The post Why is the crypto market crashing, and will it rebound? appeared first on Invezz
