The plunge in the cryptocurrency market this week has attracted widespread attention. The reasons behind this are multifaceted, including the influence of macroeconomic factors and the particularity of the cryptocurrency market itself.
Worsening macroeconomic environment: Concerns about global economic recession: Geopolitical conflicts, energy crisis and other factors have heightened market concerns about a global economic recession, investors’ risk appetite has declined, and funds have withdrawn from high-risk assets.
Major cryptocurrencies such as Bitcoin and Ethereum fell below key support levels, causing panic in the market and investors to sell for safety. Some institutional investors chose to reduce their positions or exit due to increased market uncertainty, exacerbating the market selling pressure.
The main issue is: Recently, some exchanges (like Bybit) have exposed security or operational issues, weakening investors' trust in centralized exchanges.
Moreover, the US stock market is also on a downward trend this week, with the Nasdaq index closing down 1.2%. The Bitcoin spot ETF has also been continuously flowing out this week under the influence of the US stock market!
In the past 24 hours, Bitcoin has fallen by 5%, once dropping below the $91,000 mark, hitting a monthly low. Other major cryptocurrencies have also declined: Solana (SOL) dropped over 16%, Ethereum and XRP fell by 12%, and BNB declined relatively gently by 6%, with over 90% of the top 100 tokens by market cap showing losses.
Bitcoin at 89,200 is an important support level; as long as it holds, there shouldn't be a big problem!
The main reason for the decline in ETH this time is that some traders expected Bybit to purchase a large amount of ETH in the open market to fill the gap (leading many people to take long positions in Ethereum), but this assumption proved to be incorrect. Bybit acquired a lot of Ethereum through OTC methods, forcing short-term speculators in Ethereum to liquidate their positions.
On February 24, Ethereum futures open interest decreased from 8.82 million ETH to 8.52 million ETH, indicating that traders are closing leveraged positions.
The sharp decline in the cryptocurrency market this week is the result of multiple factors, including a deteriorating macroeconomic environment, regulatory pressure, technical corrections, and worsening market sentiment. For investors, in the face of market volatility, it is important to remain calm, analyze market trends rationally, and avoid emotional trading. In the short term, the market may continue to fluctuate, but in the long term, the cryptocurrency industry still has significant growth potential; the key is to choose quality assets and manage risks well.
Shendan is still making plans every day!
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