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Crypto Market Drops by 6% in Crisis: What Happened?

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by Giorgi Kostiuk

6 months ago


Today the crypto market is experiencing a decline of 6.3%, raising concerns among investors. Let's explore the main factors contributing to this.

Bitcoin's Decline and its Consequences

One of the reasons for the crypto market's contraction is the fall in Bitcoin prices. Bitcoin dropped over 6% in 24 hours, reaching an intraday low of $42,279. This triggered a wave of panic selling among investors, worsening the market situation. 'Bitcoin went down, and that dragged the rest of the crypto market down with it,' said crypto trader John Doe at CryptoInsights. Following Bitcoin, Ethereum, the second-largest cryptocurrency by market value, lost 10% to $3,300, indicating a chain reaction in the market.

Bitcoin went down, and that dragged the rest of the crypto market down with it.John Doe

Impact of US Economic Data

Another factor is positive economic information from the US, which prompted expectations for Federal Reserve interest rate hikes. Strong economic data has led investors to move away from cryptocurrencies towards less risky assets. This has also affected the S&P 500 and Nasdaq indices, which have also decreased. FT economist Jane Smith noted, 'The numbers suggest that the dollar has weakened, and stronger economic data has forced the Fed to contemplate rate hikes,' creating an unfavorable environment for the crypto market.

The numbers suggest that the dollar has weakened, and stronger economic data has forced the Fed to contemplate rate hikes.Jane Smith

Effectiveness of LONG ETF Investments

The market decline has also impacted LONG ETF products, based on profitable moves in the crypto market. Long positions amounting to $631 million were liquidated in the past 24 hours, indicating the bearish sentiment in the market. The dispatch of such positions shows significant over-optimism by traders on market trends, exacerbating negative sentiment and complicating the market's return to the growth zone.

The decline in Bitcoin's value, combined with favorable US economic data and the forced liquidation of long positions, leads to the crypto market crisis seen today. Investors are advised to exercise caution and make informed investment decisions, considering current market conditions.

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