Reasons for the Cryptos Market Downturn⤵️
👀🔄The cryptocurrency market, led by Bitcoin and Ethereum, has experienced a significant downturn in recent days. Here are the key reasons behind this market decline:
➡️Decreased Whale Transactions
According to the search results, there has been a 42% drop in large-scale "whale" transactions over the past two days. This reduction in activity from major players in the market has likely contributed to the overall bearish sentiment.
➡️Withdrawals from Derivative Exchanges
The search results indicate that there has been a "wave of withdrawals from derivative exchanges" as some traders have adopted a "risk-off" approach, reducing their exposure by moving assets away from these platforms. This outflow from derivative exchanges has put pressure on the market.
➡️ Outflows from Spot Exchange-Traded Funds (ETFs)
The previous week saw substantial withdrawals from spot cryptocurrency ETFs, which has also contributed to the overall bearish trend in the market.
➡️Strength of the U.S. Dollar
The search results suggest that the cryptocurrency market is facing pressure from a strong U.S. dollar, which came close to a two-month high following robust U.S. purchasing managers index data. The strength of the dollar has made alternative assets like cryptocurrencies less attractive to some investors.
➡️Anticipation of Upcoming PCE Inflation Data
The market is anticipating the release of the Personal Consumption Expenditures (PCE) price index data on Friday, which is closely watched by the Federal Reserve. While the data is expected to show some cooling in inflation, it is still likely to remain above the Fed's 2% annual target, potentially giving the central bank more reason to maintain high interest rates. High interest rates generally have a negative impact on speculative assets like cryptocurrencies.
➡️ Broader Economic Context
The search results indicate that the broader economic context, including factors such as the strength of the U.S. dollar and the Federal Reserve's monetary policy decisions, are playing a role in the cryptocurrency market's price movements.
In summary, the cryptocurrency market's downturn is driven by a combination of factors, including decreased activity from large investors, outflows from derivative exchanges and ETFs, the strength of the U.S. dollar, and the anticipation of upcoming economic data that could influence the Federal Reserve's interest rate decisions.