The global cryptocurrency market has just dropped by 5.66%, leaving many investors wondering what is happening. Bitcoin, which was recently aiming for a breakout target above $109,000, has fallen back to around $104,000. That is a 3.6% drop in just 24 hours.
And it's not just Bitcoin; Ethereum, XRP, Solana, and even meme coins like Dogecoin are also following, dropping between 6% and 15%. So, what is the cause behind this sudden crash?
Hopes for Fed rate cuts have been dashed.
The biggest reason seems to be new signals from the Federal Reserve. After the latest inflation data was released, showing that core CPI remains above expectations and producer prices are rising, the likelihood of a rate cut in June has almost vanished.
According to the Fed CME tool, the market currently sees a 97.4% chance that the Fed will not cut interest rates this month. This has made investors anxious, and this is reflected in cryptocurrency prices.
Bitcoin ETFs have seen large outflows.
Another strong blow comes from the spot Bitcoin ETF. After several days of significant inflows, June 12 saw a sudden reversal, with $202 million flowing out. Leading the way was Fidelity's own ETF, which saw a withdrawal of $197 million, while ARK Invest's ETF lost over $10 million. Surprisingly, BlackRock remained unchanged with no inflows or outflows.
$1.15 billion in cryptocurrency liquidations.
Leverage traders have been significantly impacted. In the past 24 hours, over 247,000 traders have been liquidated, with total liquidation amounting to $1.15 billion. The largest single liquidation order was a long position worth $201 million on Binance.
If Bitcoin drops to around $95,800, nearly $11.76 billion worth of long positions will be at risk. This could trigger another wave of selling.
Technical charts suggest more pain ahead.
Meanwhile, technically, indicators show that Bitcoin will have to struggle more as the chart shows a rejection near the resistance zone of $106,000.
Meanwhile, the MACD is showing a slight bullish crossover, but momentum is weakening. If Bitcoin cannot hold the $104,000 level, we may soon see a retest of the $102,000 level or even $100,000.
The Altcoin market has also been affected.
Altcoins are being heavily affected, closely following Bitcoin's downtrend. The Altseason index has dropped to 16, indicating that Bitcoin still maintains its dominant market position.
Among the biggest losers, Ethereum (ETH) has dropped over 9.29%, currently trading at around $2,508. While XRP, Solana, and Cardano have all seen significant declines, there are still no signs of recovery.
