Factors Contributing to the Recent Drop in Crypto Market Cap
The cryptocurrency market experienced a significant drop in the last 24 hours, with the total crypto market cap falling around 4 percent to $2.48 trillion. The leading cryptocurrency, Bitcoin (BTC), saw a decline in value, trading at around $64,253 on Thursday during the early Asian session after facing resistance at $67k.
The increased volatility in the crypto market led to over $212 million in liquidations, primarily affecting long-term traders. Several factors contributed to the drop in cryptocurrency prices, including geopolitical issues and market dynamics beyond speculation.
One of the reasons for the decline was the TD Sequential indicator flashing a sell signal for Bitcoin in the 12-hour time frame, prompting caution among traders as the price fell below the $65,500 support level. Additionally, Bitcoin whales have slowed their accumulation pace following the recent halving event, possibly waiting for companies to announce their first-quarter earnings.
Furthermore, the negative net flow of US-based spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust and Grayscale’s GBTC, also impacted the market. BlackRock’s denial of tokenization on the Hedera network caused a significant drop in HBAR price, which fell by 35 percent to $0.1135 on Thursday.
The uncertainty surrounding US economic policies, including President Joe Biden’s proposed capital gains tax increase and speculation about potential interest rate cuts, added to the market’s volatility. Investors are closely watching the upcoming FOMC statement and federal funds rate decision next week for further clarity on the economic outlook.
Overall, the cryptocurrency market’s recent drop highlights the complex interplay of various factors influencing digital asset prices and underscores the need for investors to stay informed and cautious in their trading decisions.
