This week began on a positive note for the cryptocurrency market but took a downturn on Friday due to sudden selling pressures. What was initially a surge in optimism transformed into uncertainty as many cryptocurrencies faced significant losses, leading traders to tread carefully.
What Caused Bitcoin and Altcoins to Drop?
Bitcoin saw a rise to around $88,000 on Thursday but dropped to approximately $83,800 the following day. The CoinDesk 20 Index recorded a notable decline of 5.7%, with altcoins like Avalanche, Polygon, Near, and Uniswap experiencing losses nearing 10%. Ethereum also dropped sharply against both the dollar and Bitcoin, reaching its lowest level relative to BTC since May 2020.
How Did Economic Data Affect Market Sentiment?
Recent U.S. economic data has adversely influenced both traditional and cryptocurrency markets. Major indices such as the S&P 500 and Nasdaq fell by 2% and 2.8%, respectively, while companies linked to cryptocurrency, including MicroStrategy and Coinbase, suffered significant stock price declines.
The following points summarize the current situation:
- Bitcoin’s recent pullback to the $84,000-$85,000 range is not unexpected.
- Experts consider the $70,000-$75,000 range a strong support level.
- Economic data revealing inflation above expectations has heightened market uncertainty.
As the connection between Bitcoin and tech stocks remains strong, the current volatility emphasizes the influence of traditional market fluctuations on the cryptocurrency sector. Analysts have pointed out that Bitcoin has historically adjusted in similar conditions, suggesting that the recent pullback follows expected patterns.
With heightened concerns regarding global economic growth and upcoming U.S. tariffs, market recovery in the near future appears uncertain. The cautious sentiment prevailing among traders reflects the ongoing challenges faced by both the cryptocurrency and traditional markets.
