Quick Look:
- The crypto market sees a significant downturn, with over $500 million liquidated across 150,000 traders.
- Bitcoin drops below $66,500; major cryptocurrencies like ETH, DOGE, and SHIB experience sharp declines.
- The market recalibrates expectations, now foreseeing less aggressive rate cuts by the Federal Reserve.
- Economic shifts and the monetary policy landscape pose challenges to cryptocurrency market stability.
The crypto market has witnessed a significant downturn. Leading digital currencies, including Bitcoin (BTC), Ethereum (ETH), and others experiencing sharp declines. This plunge has resulted in over $500 million of liquidations, affecting more than 150,000 traders globally.
Bitcoin Dives Below $66.5K, Altcoins Plunge
The flagship cryptocurrency notably fell below $66,500 during the Asian trading hours. Therefore marking a significant drop from its recent consolidation range between $68,000 and $72,000. This decline exceeds 5%, pushing BTC to lows around $66,000. Similarly, other major cryptocurrencies such as DOGE, SHIB, BCH, AVAX, ETH, BNB, SOL, ADA, TON, XRP, and DOT have all plummeted, with BCH notably facing additional pressures ahead of its anticipated second halving.
Surge in Liquidations Amid Economic Shifts
A single event on the OKX platform highlighted the massive liquidations. Those involving an ETH-USD swap, which alone accounted for $7.5 million. This volatility comes in the wake of unexpectedly positive U.S. factory data. Moreover, it has been pivotal in strengthening the Dollar Index (DXY) to levels not seen since mid-November. Subsequently diminishing the likelihood of anticipated Federal Reserve rate cuts.
U.S. Factory Data Spurs Dollar, Hits Crypto
According to the Institute for Supply Management (ISM), the March manufacturing purchasing manager’s index (PMI) indicated that factory activity expanded for the first time since September 2022, with a reading of 50.3 compared to February’s 47.8. This growth, spearheaded by rebounds in the new orders index and a rise in the prices index to 55.8% from February’s 52.5%, has contributed to a more bullish outlook on the dollar and a less accommodating stance on federal monetary policy.
Fed Rate Cuts Expectation Adjusted, Crypto Shaken
Market expectations have adjusted accordingly, with the previous anticipation of three 25-basis point rate cuts for 2024 now pared back to less than 65 basis points in total. This recalibration is reflected in Treasury yields, which have risen by 10 basis points, and a widespread market consensus that the Federal Reserve may opt for less easing than expected.
These financial shifts underscore a critical moment for the cryptocurrency market as traders and investors navigate the turbulence. The stronger dollar and the evolving monetary policy landscape are crucial factors influencing market dynamics, urging stakeholders to monitor these economic indicators moving forward closely.