Key Points
- Bitcoin’s drop to $64,600 led to a $440 million liquidation in long positions.
- The broader cryptocurrency market, including Ethereum and meme coins, suffered significant declines.
The cryptocurrency market experienced a significant decline on Tuesday as Bitcoin (BTC) fell sharply, triggering a series of liquidations. Early during the Asian trading hours, Bitcoin’s price plummeted to as low as $64,600, resulting in a total loss of $440 million for leveraged traders.
Data from CoinGlass showed that leveraged long positions bore the brunt of the losses in the last 24 hours. Over $420 million, representing 87.5% of all liquidations, were from long bets on Bitcoin. The sudden price change caught a large group of traders, who were optimistic about Bitcoin’s short-term performance, off guard.
Bitcoin’s Slide Triggers Market Selloff
Major platforms such as Binance, OKX, and HTX saw a combined loss of $336 million in long positions. Despite the significant damage, Bitcoin has shown some resilience and is currently trading above $65,390. However, the broader crypto market is still feeling the effects.
The fall in Bitcoin’s price triggered a ripple effect on other cryptocurrencies, including Ethereum (ETH), the second-largest cryptocurrency, which fell almost 2.18% in the last day and is now trading around $3,440. Popular altcoins like Solana (SOL), Toncoin (TON), and Cardano (ADA) performed even worse, dropping 4.70%, 5.20%, and 6.70% respectively.
The meme coin sector saw even steeper declines. Dogecoin (DOGE), also known as the “internet currency of dogs,” fell nearly 8.40% in the past 24 hours and is currently trading at $0.1219. Other meme coins like Shiba Inu, PEPE, Dogwifhat, and Floki experienced substantial losses, with drops exceeding 10%.
Fed Rate Hike Impacts Crypto Market Rebound
The recent market sentiments are partly due to the fight against inflation. Last week, the Federal Reserve decided to maintain the interest rate at a 23-year high of 5.25% to 5.5%. This indicates that the Fed is cautious about easing monetary policy until there are clear signs of lower inflation.
While inflation has slightly eased, with consumer prices rising 3.3% in May compared to 3.4% in April, it is still above the Fed’s 2% target. Fed Chairman Jerome Powell acknowledged some progress in reducing inflation but stated that more evidence is needed before lowering interest rates.
The Fed now anticipates only one rate cut in 2024, down from the previously expected three. As the Fed navigates the challenges of inflation, investors should brace for ongoing uncertainty and potential price fluctuations in the crypto market.
