Key Insights
- The crypto market was down by about a percent in the last 24 hours.
- Profit-taking following recent gains, pricing in the Fed’s rate cut, and caution from macro signals led to a decline in crypto prices.
- “Sell the news” effect after the Fed’s decision, some traders moved out rather than stayed in, reducing momentum.
The crypto market dipped by almost a percent in the last 24 hours as most coins revisited pre-FOMC levels. Bitcoin (BTC) was trading above $115K, but most of the altcoins in the top 100 were outperforming it.
A key observation noted the escalation of profit-taking activities, where most spot holders had sold their tokens to the market. Despite the cooling price, most coins traded above the levels that produced last week’s moves.
In the meantime, we will expound on how the top-capped crypto coins moved, why the trend had shifted as the weekend kicked in, and the potential market reaction in the coming week.
Crypto Market Performance
Despite the dip in capitalization of the entire crypto market, it stayed above $4 trillion. Bitcoin held about 57% of this capital. The top 20 assets, excluding stablecoins and wrapped tokens, also fell by 0.72% on the day.
Regarding market sentiment, the Fear & Greed index was 48, indicating neutral conditions. However, this decline came after the markets following the Fed’s decision to cut rates. The RSI was at 46.63, indicating seller momentum was closer to oversold levels than overbought conditions.
The altcoin season index affirmed that most of the coins in the top 100 were outperforming Bitcoin. In fact, 77 of them had more returns than those of BTC in the past three months, as the index indicated.
The top 5 coins by capitalization, excluding stablecoins, were down except for Binance Coin (BNB). The altcoin hit its new peak above the $1,000 mark and was holding above it. Meanwhile, Ethereum (ETH), Ripple (XRP), and Solana (SOL) were all down by a percent or more.
Why is the crypto market down?
The crypto markets declined as the weekend progressed. The decline resulted mainly from the profit-taking that followed last week’s reaction to the Fed’s decision. At the same time, the crypto markets did not react as robustly as the currency markets, but the massive capital that entered had to be priced in.
That takes us to the second reason why crypto prices had to fall. Usually, such positive news drives capital into the financial products, which results in short or massive rallies. Naturally, markets tend to reverse to accommodate this new liquidity.
Additionally, the “sell the news” effect likely caused traders to liquidate their assets. For instance, the green light from the Securities and Exchange Commission (SEC) on crypto ETFs sparked profit protection across most altcoins. In particular, the REX-Osprey Dogecoin ETF listing turned the memecoin market volatile, with DOGE prices falling from $0.30 to $0.26 when writing.
Caution from macro signals like the rising inflation showed the other side of the risk in the crypto market. Still, the geopolitical unrest added to the decline in price as crypto markets moved during the weekend.
How Will Crypto Price React This Week?
For crypto, patterns are key to determining potential market direction, though they are not usually certain. A positive reaction could be anticipated with most of the cryptos trading around the levels seen pre-FOMC. This was simply because the retracement had already occurred; for most, it was 100% from where the moves began.
Bitcoin and Ethereum had to maintain their respective values above $115K and $4.2K to propel the rest of the market higher. If these two stayed bullish, the market would follow. Similarly, other cryptocurrencies will lose value if Bitcoin and Ethereum decline, except for the widely held beliefs that currently control the market.
