Crypto Market Plunges as Fed Concerns and Liquidations Surge
This week, the crypto market took a critically important hit. On September 25, Bitcoin’s value dropped to $110,000, and the total market cap of all cryptocurrencies fell to $3.81 trillion.
The downturn is fueled by fears that the Federal Reserve might not cut interest rates as much as anticipated.This uncertainty has led to a crypto crash.
The Crypto Fear and Greed Index has also declined this week, reflecting a worsening sentiment in the industry. only five of the top 100 coins showed gains today, with popular tokens like Avalanche (AVAX), Aster (ASTER), and Dogecoin (DOGE) experiencing drops of over 10%.
- Avalanche has fallen by 16% from its monthly high.
- Aster and Dogecoin have seen declines of over 15% in the same period.
The crypto crash is partly due to hawkish statements from Fed officials. Jerome powell and others have expressed concerns about high U.S. inflation and a tight labor market. This has dampened hopes for multiple rate cuts, wich typically boost risk-on sentiment in the crypto space.
Additionally, rising liquidations have contributed to the market’s decline. liquidations surged by 100% on Thursday, reaching $585 million. On monday, liquidations spiked by over 800% to more than $1.65 billion.
These liquidations are bearish for the crypto market, as they indicate that long positions are being closed. traders often become cautious during such times, leading to a decrease in futures open interest. Data shows that the futures open interest of all coins fell by 2% on Thursday to $203 billion.
