The cryptocurrency market took a significant hit on Monday, dropping by 7%, with Bitcoin falling 6.5% to $3.38 trillion. Hereโs a breakdown of the factors contributing to this downturn:
๐ฅAI CONCERNS AND ECONOMIC FEARS
The market's decline was triggered by fears surrounding AI developments, especially after the release of DeepSleek's free AI. These concerns, coupled with expectations for this week's Federal Reserve meeting and profit-taking following Trumpโs crypto measures, led to market instability.
๐ฅBITCOIN STRUGGLES BELLOW KEY SUPPORT
Bitcoin dropped to below $98,000 early in European trading. After staying above its 50-day moving average for 10 days, itโs now testing this level again. If the market doesn't recover soon, the next support level at $93,000 (from the past nine weeks of trading) will be crucial to watch.
๐ฅETHERNUM TAKES A HIT
Ethereum also saw a significant decline, falling below $3,000 for the first time since November. It briefly touched its 200-day moving average, and a break below this could signal further bearish trends.
๐ฅETFs SHOW MIXED INFLOWS
Despite the market drop, the US spot Bitcoin ETF saw inflows of $1.76 billion last week, though slightly down from the previous $1.96 billion. Similarly, the Ethereum ETF saw a decrease in inflows to $139.3 million from $212 million.
๐ฅINVESTOR BEHAVIOUR AND MARKET SENTIMENT
CryptoQuant noted that experienced investors continued to hold Bitcoin, resisting selling despite the volatility. Large Bitcoin holdings increased, suggesting institutional confidence in the asset.
๐ฅREGULATORY MOVES AND MARKET REACTIONS
On the regulatory front, the US SEC repealed SAB 121, which had prohibited banks from storing cryptocurrency. Additionally, Nasdaq filed to enable in-kind redemptions for the iShares Bitcoin Trust (IBIT), offering more flexibility for investors.
๐ฅRIPPLE INFLUENCE AND TON NETWORK GROWTH
Some experts, like Pierre Rochard from Riot Platforms, believe Ripple's actions hinder the creation of a strategic US cryptocurrency reserve. Meanwhile, the TON network reported massive growth, with 36.2 million new Bitcoin wallets created in 2024, a significant rise from the previous year.
๐ข๐ฅCONCLUSION
In summary, while the crypto market faces short-term volatility driven by a mix of economic and technological fears, ongoing institutional investment and regulatory shifts continue to shape the landscape.
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