The cryptocurrency market experienced a significant drop of over 4.2% on Thursday, bringing the total market cap to around $3.8 trillion during the mid North American session. Bitcoin (BTC) also saw a decline of over 3% in the past 24 hours, dropping to a low of approximately $108,787 before rebounding to around $109,693 at the time of writing.
Altcoins such as Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE) led the market in a drop of more than 6%, contributing to the overall bearish sentiment. This decline also triggered heavy liquidation of long traders, with a total of $1.13 billion in liquidations reported today.
Top Reasons Why Crypto Dropped Today
Long Squeeze Impact
The ongoing long squeeze in the leveraged crypto market has been a major factor in the recent market downturn. Over $2.8 billion has been liquidated since Monday, primarily affecting long traders and causing a shift towards bearish sentiment among traders.
Technical Headwinds
The technical outlook for the wider crypto market has been bearish in recent weeks. Bitcoin, for example, has been following a symmetrical falling trend for the past two months. This trend, coupled with the overall market sentiment, has contributed to the downward pressure on prices.
As Bitcoin’s price tends to dictate the direction of the overall market, this bearish outlook is expected to persist in the near future. Additionally, investors have been turning to traditional safe-haven assets like Gold, which recently saw a parabolic move.
Sell-the-News on Fed Rate Cut
The recent Federal Reserve rate cut on September 17 led to a series of cooling-offs in the crypto market. Traders had anticipated this move and had accumulated buy orders in anticipation, leading to a classic sell-the-news scenario once the rate cut was announced.
What’s Next?
Is Altseason Out of the Picture?
According to crypto analyst Benjamin Cowen, the altcoin market is likely to continue bleeding against Bitcoin until the end of October. Cowen predicts that Bitcoin dominance will rise above 60% in the coming weeks, indicating a continued focus on the leading cryptocurrency.
Cowen believes that the real altcoin rally may kickstart in November, especially after Ethereum achieves new all-time highs. The approval of spot altcoin ETFs by the U.S. SEC is seen as a significant milestone that could potentially pave the way for an altseason before the end of the year.
In conclusion, while the current market conditions may be challenging for altcoins, there is still optimism for a potential rally in the near future, driven by key developments in the cryptocurrency space.