The cryptocurrency market took a tumble on Wednesday, following a broader sell-off that swept through stocks. Bitcoin, the world’s largest cryptocurrency, plunged as low as $65,188 during trading hours before recovering some losses overnight. Ethereum, the second-largest cryptocurrency, also sank below $2,500 for the first time in nearly 10 days, hitting an intraday low of $2,463.
This downward trend comes after a period of strong gains seen at the beginning of the week. Analysts attribute the sell-off to a number of factors, including rising Treasury yields and the strengthening US dollar.
The slump in crypto prices was further underscored by a surge in liquidations, with over $277 million worth of cryptocurrency positions liquidated in the past 24 hours – the highest level in a week.
The global cryptocurrency market capitalization stood at $2.28 trillion, reflecting a 2.19% drop in the past 24 hours.
Meanwhile, stocks continued their downward slide for a third consecutive session. The Dow Jones Industrial Average plummeted 409.94 points, or 0.96%, to close at 42,514.95. The S&P 500 slipped 0.92% to close at 5,797.42, while the tech-heavy Nasdaq Composite fell 1.60% to 18,276.65.
The benchmark 10-year Treasury yield continued its upward climb, briefly exceeding 4.25%, its highest level since late July.
The yield has risen significantly since the Federal Reserve’s aggressive 0.5% interest rate cut last month. Despite this, investors anticipate a 25 basis point rate cut during the next FOMC meeting, according to the CME FedWatch tool.
Analyst Perspectives
Prominent cryptocurrency analyst Rekt Capital observed that the ongoing retest would be considered “successful” if Bitcoin managed to stay above $66,200 until the new weekly close.
“Promising signs so far,” the trader remarked.
Meanwhile, widely-followed cryptocurrency market researcher Michaël van de Poppe linked Bitcoin’s sideways movement to rising Treasury yields and the strengthening US dollar. However, he predicted volatility as more macroeconomic data becomes available.
This downturn in the cryptocurrency market highlights the volatility inherent in the digital asset class and its sensitivity to broader economic trends. As the market navigates these challenges, investors will be closely watching for any signs of a rebound and the impact of upcoming macroeconomic data releases.