The cryptocurrency market is experiencing high volatility as a response to the recent announcement of the U.S. Strategic Crypto Reserve. Initially, the crypto market boomed by $400 billion , but then within the next 36 hours, approximately lost $100 billion in total market capitalization.
Technical Analysis: Ethereum's Sharp Decline
$ETH best illustrated this volatility. After the announcement, ETH’s price jumped from $2,173 to $2,550 but then in the next 12 hours, it dropped by 21%, ranking 8% lower the initial price.
Market Sentiment and Institutional Movements
The crypto movements experienced a record outflow of $2.6 billion in late February, which signified the loss of investor confidence prior to the reserve announcement. The Crypto Fear & Greed Index rose from 20 (extreme fear) to 55 (greed).
Broader Economic Factors Influencing the Market
The market’s downfall aligned with the global trade tensions and economic policy uncertainities. This has led to investors retreating from riskier investments, even in cryptocurrencies, which was an added contribution to the market decline.
While the U.S. Crypto Reserve announcement did boost market enthusiasm, broader economic concerns led to a net loss of market capitalization.
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