February 20, 2024

Cryptocurrency Market Goes Through Another ‘Blackout’, Bitcoin Hits 3-Month Low

After a brief rebound from the fall that occurred last Saturday (10), the cryptocurrency market has returned to a sudden sharp decline. Unlike last time, Bitcoin (BTC) and Ethereum (ETH) are also trading, down 3% and 4.4% respectively in the past hour.

After the Federal Reserve halted interest rate hikes on Wednesday afternoon (14), both cryptocurrency and stock markets ‘swinged’. However, the S&P500 index, which aggregates the 500 largest companies in the United States, has already recovered its losses.

In other words, the cryptocurrency market is suffering on its own and the US central bank’s monetary policy doesn’t seem to have anything to do with the fall.

Although, it is worth noting that Jerome Powell, Chairman of the Federal Reserve, said that lowering interest rates could take years, with consequences for both the market and the US economy.

So, while cryptocurrencies did not immediately plunge after his speeches, it is likely that a lack of positive reaction caused the flash crash.

The cryptocurrency giants are falling back again

As a determinant, Ripple (XRP), the sixth largest in the market, fell 6%. Solana (SOL) and Litecoin (LTC) lost 5.35% and 5.7% respectively in minutes.

Ethereum is trading below $1,650, its lowest level since March 14th. Same goes for Bitcoin, as it is testing the $25,000 support, BTC is hitting a 3-month low.

Previously, last Saturday, the two giants did not follow the sharp decline in the market.

As shown in the image below, showing the biggest losses in the past hour, the rapid crash hit the entire market in a similar way. The average decrease is 6%.

Cryptocurrency market is presenting a fresh general bearishness after making a short recovery. Source: Coin360.

The cryptocurrency market continues with no expectations of recovery

With US regulatory pressures and news that the Federal Reserve is poised to keep interest rates high for years, the cryptocurrency market remains sensitive. Furthermore, the rumors that the US Department of Justice is going to sue Binance could leave the big players “preparing for the worst.”

In any case, now it is worth paying attention to the upcoming US inflation data. After all, it’s hard to imagine that inflation won’t soon return to the Fed’s 2% target with interest rates between 5 and 5.25%.

Finally, a pause in the interest rate, after 10 consecutive increases, is a good sign for the markets. After all, this shows that the Fed’s next move will be to release stimulus to the economy, with just a matter of time for that to happen.

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