The value of Bitcoin, the leading digital asset, experienced a decrease of more than 5% on Tuesday morning. This drop occurred alongside reduced interest in specific US exchange-traded funds (ETFs) due to diminishing expectations of a looser Federal Reserve monetary policy.

The crypto market saw liquidations totaling $396 million, affecting various top cryptocurrencies as well as meme tokens like Pepe and dogwifhat. This caused a significant decline in smaller digital assets over the span of two days.

According to Coinglass data, more than 120,000 traders were liquidated within the past 24 hours. The largest liquidation order registered on OKX involved ETH-USD-SWAP, valued at $7.48 million.

Approximately 80% of the total liquidated positions ($315 million) were long bets, indicating traders' anticipation of a market reversal that did not materialize.

The ongoing robust crypto rally in 2023 seems to be losing steam due to increasing US price pressures, leading investors to scale back their speculation on potential Fed interest-rate cuts. As Treasury yields and the dollar strengthen, speculative sectors like digital assets face a challenging environment.

Experts highlight that changing perceptions about the Federal Reserve are influencing the entire crypto space, resulting in a sell-off across various sectors, particularly those that have outperformed Bitcoin over the past six months.

Despite an upcoming halving of new Bitcoin tokens, which some traders view positively for the cryptocurrency, others believe that further price increases may be constrained given Bitcoin's substantial appreciation since the beginning of the year.

At the time of writing, Bitcoin is trading at an average price of $66,448, with a 24-hour trading volume of $40.5 billion, representing a 62% increase.