The cryptocurrency market has faced a severe downturn, with the overall market capitalization dropping from $2.57 trillion to $2.29 trillion, a more than 2% plunge. The leading cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), have experienced a significant fall, with Bitcoin decreasing by 15% within five hours. Other notable cryptocurrencies, such as Solana (SOL), Binance Coin (BNB), XRP, and Cardano (ADA), also recorded substantial losses. The volatile meme coins, including Dogecoin (DOGE) and Shiba Inu (SHIB), were not spared, each witnessing a decline of over 10%.
Initiation of a Crypto Sell-Off by Bitcoin Miners
Subsequent to Bitcoin hitting record highs, onchain data suggests Bitcoin miners began transferring large sums to exchanges, instigating a sell-off. Consequently, Bitcoin’s price tumbled from its peak to a lower value, paralleling a reduction in reserves held by miners to levels last seen in 2021. Additionally, the market saw an ancient stash of 1,000 BTC, dormant since the Satoshi era, being moved to the Coinbase exchange, hinting at increased selling pressure from Bitcoin miners as the halving event draws near.
The sell-off is not limited to miners but also involves cryptocurrency whales, who, according to Whale Alert, have transferred significant amounts of various cryptocurrencies to exchanges, reaping profits from the recent price surges.
Over $1 Billion in Crypto Liquidations Recorded
The market’s setback has led to widespread liquidations, culminating in a staggering $200 billion loss in market capitalization. Coinglass data indicates total liquidations of around $1.10 billion, affecting over 297,000 investors. One of the largest liquidations occurred on BitMEX, worth $9 million. The liquidations predominantly affected long positions, with Bitcoin and Ethereum suffering the heaviest blows.
Interest Rate Decisions Influence Crypto Stability
Macro-level financial decisions in the United States, including the Federal Reserve’s cautious stance on interest rate cuts, are influencing Bitcoin’s stability. Investors anticipate further clarity from Fed Chairman Jerome Powell’s upcoming congressional testimonies, while the CME FedWatch Tool hints at a possible rate cut in June, though Wall Street predicts a delay to the second half of the year.