The crypto market experienced a sudden and unexpected hit on April 12, with Bitcoin and prominent altcoins seeing a decline in prices that resulted in massive liquidations. While the exact cause of this price dip remains unclear, there are several possible reasons that could have contributed to it. One of the speculated reasons includes a recent correction in the US stock markets, which saw the S&P 500 index declining by 1.6% to trade as low as $5,108.
Impact on Bitcoin and Altcoins
According to data from CoinMarketCap, Bitcoin slipped by 4.49% in the last day, dropping as low as $66,052. This decline in Bitcoin’s price had a ripple effect on the market, with other prominent altcoins like Ethereum and Solana also recording daily losses of 8.12% and 12.16% respectively. These losses resulted in a significant number of traders losing their leverage positions, with a total of $877.21 million in liquidations recorded in the last 24 hours, as reported by Coinglass.
US Federal Reserve’s Role
The recent Consumer Price Index (CPI) data showing a rise in the inflation rate to 3.5% year over year in March indicates that the US Federal Reserve (Fed) may not implement any rate cuts soon. This lack of rate cuts can affect the crypto market negatively, as it limits investor’s ability to seek out risky assets like Bitcoin with the potential for high returns. Fed rate cuts typically encourage investors to explore risky investments, including cryptocurrencies.
Despite the recent price dip, Bitcoin has shown some positive signs leading up to the Halving event on April 19. Blockchain analytics platform Santiment reported an increase of 370,000 BTC wallets holding active coins over the last six days, suggesting a growing interest in the cryptocurrency. This trend is expected to continue through the Halving event, which could have a positive impact on Bitcoin’s price and market sentiment.
As of the time of writing, Bitcoin was trading at $66,882, with a 44.80% increase in its daily trading volume, reaching $43.80 billion. Despite these positive indicators, Bitcoin has seen a decline of 1.33% and 6.20% in the last seven and 30 days, respectively. This downward trend in Bitcoin’s price performance raises concerns about the cryptocurrency’s short-term prospects in the market.
The recent price dip in the crypto market, particularly in Bitcoin and other altcoins, has raised questions about the factors influencing the market’s volatility. While the exact cause of the price drop remains unclear, factors such as the US stock market correction and the Federal Reserve’s lack of rate cuts are potential contributors. However, positive trends, such as the increase in Bitcoin wallets and the upcoming Halving event, could help bolster market confidence in the long run. Investors are advised to conduct thorough research and exercise caution when making investment decisions in a volatile market like cryptocurrencies.
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