Cryptocurrency Prices Plunge Despite Positive Forecasts
Despite the recent news of lower than expected inflation rates, the top cryptocurrencies have failed to see significant gains, leading to disappointment among investors and triggering a wave of liquidations. Bitcoin (BTC) experienced a drop from over $70,000 last week to below $67,000 early this week.
Following the release of the inflation report on Wednesday, BTC surged back to about $70,000, only to face another decline. The price plummeted to around $65,100 in just one hour on Thursday, marking a 2% decrease from $67,000. This unexpected dip left many holders and traders concerned, especially after the positive inflation data was announced.
The recent downward trend in BTC’s price has sparked a wave of selling activity, preventing the cryptocurrency from experiencing a sustained rally despite the favorable inflation news. Over the past seven days, BTC has seen a decrease of over 7%. The sudden drop on Thursday led to approximately $180 million in leveraged BTC trades being liquidated within a single day, contributing to the 2% price drop.
In addition to the significant liquidations in the BTC market, over $870 million has been liquidated from leverage trades in the past week. US-based BTC exchange-traded funds (ETFs) have also witnessed substantial outflows this week, with approximately $226 million being withdrawn from these products on Thursday. Other top altcoins such as SOL, AVAX, and ADA have experienced price declines ranging from 10% to 20%, while Ethereum (ETH) dropped to around $3,400.
At a broader level, speculative assets like cryptocurrencies are facing challenges following announcements suggesting that interest rates will remain unchanged in the near future. Investors are shifting away from speculative assets due to less favorable borrowing rates, impacting the overall market sentiment.
The recent fluctuations in the cryptocurrency market can also be attributed to the strength of the US dollar, which has been performing well amid political uncertainties in European countries like France. A strong dollar value makes it more challenging for BTC to increase in value, consequently affecting the growth potential of altcoins as well.
Overall, the recent price drops in cryptocurrencies, particularly BTC, highlight the volatility and sensitivity of the market to external factors such as inflation rates, interest rate expectations, and global economic conditions. Investors and traders are closely monitoring these developments to navigate the evolving landscape of the cryptocurrency market.