The cryptocurrency market has experienced a significant downturn, with over $270 billion in market value evaporating within a 24-hour period.
As of press time, the total market capitalization of cryptocurrencies stood at $3.45 trillion, down from $3.72 trillion just a day prior, according to CoinMarketCap data.
Leading the charge in this crash were some of the market’s top cryptocurrencies. Bitcoin (BTC), Ethereum (ETH), and XRP all saw substantial drops.
Bitcoin, for instance, is trading around $103,944. Ethereum’s price has also slumped, now hovering around $3,500, while XRP, despite the recent excitement surrounding Ripple’s Swell conference, fell by 5.46%, trading at $2.27.
Why crypto market is crashing
The catalyst for this sharp sell-off appears to be comments by United States Federal Reserve Chair Jerome Powell. At last week’s meeting, Powell stated that a rate cut in December was not guaranteed, signaling a slower pace of interest-rate reductions and caution regarding inflation.
These remarks immediately impacted global risk sentiment, leading to a sell-off in both equities and cryptocurrencies.
At the same time, the rising strength of the US dollar, particularly against the Japanese yen, has further amplified the aversion to risk assets, pushing traders to shift toward safer investments.
Additionally, volatility in the cryptocurrency market has been exacerbated by derivatives activity. With perpetual contract volumes soaring by 142% and open interest falling by 5.1%, there have been signs of a classic long squeeze.
Pressure on leveraged positions
This has placed pressure on leveraged positions, with major altcoins like Solana (SOL) and XRP experiencing 8% to 9% drops. In Solana’s case, the price fell below its 200-day exponential moving average (EMA), triggering liquidation events to the tune of $19 million.
The market has also been plagued by what analysts are calling “narrative fatigue.” Despite ongoing institutional interest, particularly BlackRock’s push for tokenization, the technical damage to altcoins has been significant and difficult to overcome.
As the sell-off continues, traders are keeping a close eye on upcoming macroeconomic data, including the U.S. jobs report on November 7, which could further impact market dynamics.
Featured image via Shutterstock
