Why is crypto market crashing today? Bitcoin sheds 6%, Ethereum dips 8%
Crypto markets are in a bloodbath on Monday due to macroeconomic conditions globally. The market is struggling to keep its 900 billion dollars valuation. Investors held a cautious position as they await US Fed's monetary policy outcomes amidst soaring inflation. The crypto leader Bitcoin has dipped to a three-month low, while Ethereum nosedived more than 8% during the day. The hype around Ethereum Merge has subsided and there are fewer catalysts in the crypto market currently. Also, the strengthening in the US dollar has further acted as a spoilsport in dampening global markets mood making cryptocurrencies vulnerable too.
At the time of writing, on CoinMarketCap, the global crypto market cap was at $914.50 billion down by 5.56% over the last day. However, there is a rise in total crypto market volume by 66.3% to $81.92 billion over the last 24 hours.
Meanwhile, the total volume in DeFi is currently $5.84 billion --- 7.13% of the total crypto market 24-hour volume. The volume of all stablecoins is now $74.80 billion --- which is 91.30% of the total crypto market 24-hour volume.
Bitcoin was trading near $18,765.08 down by 6.04%, while Ethereum traded at $1,314 plunging by 8.44%. Other major cryptocurrencies like BNB, XRP, Cardano, Solana, and Dogecoin tumbled between 4-8%.
Bitcoin's dominance stood at 39.34% at present lower by 0.19% over the day.
In the last seven days, Bitcoin and Ethereum shed nearly 16% and 25% respectively.
Among the gainers in the crypto market are --- Helium up by 4%, Terra ClassicUSD, and Neutrino surging more than 1% each. In the top underperforming list were -- Ethereum Classic dipping nearly 13%, followed by Kusama, Curve DAO Token, EOS, Celsius, and Ravencoin plummeting between nearly 11-12%.
Talking about the crypto market's performance, Rajagopal Menon, Vice President, WazirX said, "The Fed has been raising rates aggressively to tame inflation since its meetings in March of this year. More than expected August CPI inflation data from the US has reinduced fears that interest rate hikes will continue to prevail globally. US Dollar Index DXY has undergone another rally this week and is now nearing 110. This news has impacted multiple investment markets such as stocks and cryptocurrencies."
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Adding Menon said, "after the successful completion of the Merge ETH prices fell on the "sell on the news" phenomenon; this was followed by a decline in prices of other cryptos. Since all the hoopla around the merge has abated. The short-term traders who bought ETH in the anticipation of positive momentum and to get the forked tokens have sold their positions after the event. This has led to a significant drop in prices."
Meanwhile, Edul Patel, CEO, and co-founder of Mudrex - A Global Crypto Investing Platform said, "The second largest cryptocurrency, Ethereum, has been down by 24% over the last week. The slump might be due to the soaring inflation, fear of recession, and anxiety around the Federal Open Market Committee's meet-up on the 21st of September over the next interest hike."
US Federal Reserve's monetary policy will begin from September 20 to 21. US inflation came in higher-than-expected at 8.3% in August 2022.
Last week, Ethereum finally upgraded to Merge. The new upgrade has completed Ethereum's transition to proof-of-stake consensus, officially deprecating proof-of-work and reducing energy consumption by ~99.95%. Many had expected the Merge's launch to spur the crypto market, however, experts believe the upgrade came at the wrong time when markets are not strong.
Amanjot Malhotra, Country Head - India, Bitay said, "The crypto slump in the market is a direct result of the macroeconomic conditions Globally. The Ethereum merge could not have taken place at a worse time as the markets are not that strong. Due to soaring inflation, the Federal Reserve has taken an extremely bearish stance for the market as their main goal is to control inflation."
Further, Prashant Kumar, Founder, and CEO at weTrade said, "Ethereum completed a historic update with the Merge last week. With a move that big, there are bound to be teething troubles. There was a certain amount of short-term selling that was also expected. However, we are seeing a decline in all cryptocurrencies and not just Ethereum. The current decline cannot be associated with the Merge alone but global economic factors including inflation hikes in the US are key contributors to this."
Talking about where Bitcoin is likely headed, Mudrex CEO said, "The CPI data released has impacted the Bitcoin market negatively, so BTC will likely retest the buyer's commitment between US$19,000 and US$18000 support. We may see a bullish pattern if BTC can survive above this support."