The cryptocurrency market is currently experiencing a significant downturn, with leading cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) facing notable price declines. Bitcoin notably dipped below $94,000, and the broader altcoin market is also feeling the pressure. This widespread sell-off has pushed the total cryptocurrency market capitalization down to $3.3 trillion, a level not seen in almost a month. If you’re wondering, Why Crypto Is Down, you’re not alone.
This recent market correction is largely attributed to the Federal Reserve’s (Fed) recent monetary policy announcement last week. The initial signs of this downturn emerged when Bitcoin first slipped below the $100,000 mark following the Fed’s statement. Since then, the market has witnessed a continued decline, triggering substantial liquidations and impacting the overall market capitalization.
Let’s delve into the key factors contributing to why crypto is down today and explore technical price predictions for major cryptocurrencies such as Bitcoin, Ethereum, Ripple (XRP), and Dogecoin.
Immediate Market Reaction and Key Stats
Over the past day and week, the cryptocurrency market has faced considerable headwinds. Bitcoin and major altcoins, including Ethereum, XRP, and Dogecoin, have all experienced significant losses. During Monday’s trading session, Bitcoin briefly fell below $94,000 before recovering slightly to around $95,800. This still represents an 8.5% decrease over the past week.
Ethereum has suffered even more substantial losses, with a nearly 16% drop in the same period, currently trading around $3,300. XRP has also declined, falling by 8% to a price of $2.20. Dogecoin, the popular meme coin and seventh-largest cryptocurrency by market cap, has seen a sharp 21% reduction in value, now trading at approximately $0.31.
These price declines across major cryptocurrencies have had a cascading effect on the total market capitalization, which has fallen to just over $3.3 trillion. This marks the lowest point in market capitalization in the last month, signaling a significant shift in market sentiment.
The Crypto Fear and Greed Index, which had previously indicated “extreme greed,” has now shifted towards a neutral sentiment, hovering around 50. This index movement suggests that investors are currently adopting a cautious “wait-and-see” approach, indicating neither panic selling nor aggressive buying.
Liquidations Impact: Almost $300 Million in Leveraged Positions
Despite the significant market downturn, the volume of leveraged position liquidations hasn’t surged dramatically in the last 24 hours. Data from Coinglass indicates that approximately $283 million in leveraged positions were liquidated. Of this total, $191 million were long positions, and $92 million were short positions.
This liquidation data suggests that traders who were betting on continued upward momentum for Bitcoin, Ethereum, XRP, Dogecoin, and Solana have experienced the most significant losses. As the market declined, these traders were forced to close their positions to mitigate further losses. Bitcoin and Ethereum accounted for the majority of liquidations, with each experiencing around $42 million in long position liquidations and approximately $19–20 million in short position liquidations.
The Federal Reserve’s Role: Interest Rate Decisions and Investor Sentiment
A primary driver behind why crypto is down is the Federal Reserve’s recent monetary policy stance. While the Fed did implement a widely anticipated 0.25% rate cut, Fed Chair Powell’s subsequent cautious remarks about future rate cuts and his emphasis on maintaining a restrictive policy to combat inflation have rattled investors. The Fed’s projection of only two rate cuts in 2025 was less aggressive than what many market participants had anticipated.
This Federal Reserve decision had an immediate and substantial impact on the cryptocurrency market. Following the announcement last Wednesday, Bitcoin experienced a sharp decline from near its recent highs, dropping almost 6% in a single day. The current monthly lows across the crypto market are largely a direct consequence of Powell’s announcements and the revised outlook on interest rate adjustments.
Federal Reserve Chair Jerome Powell says the Fed is “not allowed to own Bitcoin”They weren’t allowed to own Corporate Bonds before Covid either.Rules change… 😉 pic.twitter.com/3UBBUuKtdF
— Bitcoin Archive (@BTC_Archive) December 18, 2024
Furthermore, broader global liquidity conditions are tightening. Central banks are reducing their balance sheets, and increased volatility in the bond market is creating an environment less favorable for risk assets. This macroeconomic backdrop is particularly affecting Bitcoin and other cryptocurrencies, which are known to be sensitive to changes in liquidity and investor risk appetite.
Technical Analysis of Major Cryptocurrencies
From a technical analysis standpoint, Bitcoin’s long-term outlook remains relatively stable despite the recent downturn. BTC is currently retesting a local support level just below $93,500. This level has been tested multiple times since late November and represents a key area of interest for traders and analysts.
This support level coincides with the local peaks seen on November 13, a point at which this price level marked a new record high. Bitcoin is currently encountering crucial technical support, further reinforced by the psychological level of $92,000 and the 50-day exponential moving average. The $90,000 level just below acts as a significant psychological barrier that bulls are expected to defend strongly.
According to some analysts, a drop below $74,000 for Bitcoin would be a cause for greater concern. This level is where the 200-day exponential moving average converges with support levels from October 29. Key resistance levels for Bitcoin are identified at $100,000 (a major psychological barrier), $104,000 (the October 5 highs), and $108,000 (the current all-time high from December 16–17).
Experts at VanEck suggest that following the current correction, Bitcoin is poised to re-enter a price discovery phase. They have issued a bullish Bitcoin price prediction, forecasting a potential BTC price of $180,000 by next year.
Ethereum is currently testing support at the 61.8% Fibonacci retracement level, which aligns with month-old lows. Below this level, more significant support is found at $3,000, reinforced by the 200-day moving average and the 50% Fibonacci retracement level. Analysts have projected that ETH could potentially reach between $4,000 and $6,500 by the end of 2024, and even as high as $32,000 by 2030.
Dogecoin has established support around the $0.30 level for nearly a week, coinciding with month-old lows. Should this support level fail to hold, a further decline towards the 200-day EMA near $0.22 could be anticipated.
XRP has maintained local support at $2.20 since mid-November. Even if this level is breached, strong psychological support exists at $2.00 just below. A drop below this $2.00 level might trigger more significant concerns among XRP investors. CryptoGeek’s XRP price prediction suggests a potentially dramatic surge for XRP, estimating it could reach almost $1,000 next year.
XRP BULL RUN HAS STARTED!! $XRP WILL BE $973 by 2025!The XRP Price charts just reflected previous patterns exactly. If you do the TA this bull run XRP could reach almost $1000! pic.twitter.com/7yH1xiwKOl
— CryptoGeek (@CryptoGeekNews) November 16, 2024
FAQ: Why Is Crypto Down?
Why is the crypto market dropping?
The crypto market is primarily declining due to the Federal Reserve’s recent monetary policy announcement. Despite a 0.25% rate cut, Fed Chair Powell’s hawkish comments and indications of fewer rate cuts in 2025 have negatively impacted investor sentiment. Additionally, tighter global liquidity and rising bond market volatility are creating unfavorable conditions for risk assets like cryptocurrencies.
Will crypto ever go up again?
Historical patterns and underlying market fundamentals suggest a strong potential for recovery. Bitcoin’s rapid rebounds above $100,000 after previous dips demonstrate this resilience. The 2024 market has shown strength through increased institutional investment and positive regulatory developments, although ongoing market volatility remains a factor.
What has happened to crypto today?
Today, Bitcoin has fallen below $94,000, and Ethereum has dropped to around $3,350. The total market capitalization has decreased to $3.3 trillion, the lowest in nearly a month. This downturn triggered approximately $1.5 billion in liquidations across the cryptocurrency market.
Why is Bitcoin dropping now?
Bitcoin’s current decline is attributed to several factors: the Federal Reserve’s hawkish stance on interest rates, concerns about a slower pace of rate cuts in 2025, and typical low liquidity conditions often seen before holidays. Market structure vulnerabilities and high leverage levels have also contributed to the downward pressure.
Why is XRP crashing?
XRP’s decline is part of the broader market downturn following the Federal Reserve’s policy announcement. Like other cryptocurrencies, XRP is reacting to macroeconomic factors and a general risk-off sentiment prevailing in the market.
Why is Dogecoin falling?
Dogecoin’s fall can be attributed to the Federal Reserve’s policy impact, reduced transaction volumes, and a decrease in daily active addresses. Furthermore, a recent network vulnerability causing crashes in 69% of Dogecoin nodes has also contributed to negative market sentiment.
