Date: February 2, 2025 | 04:22 AM GMT
The cryptocurrency market has experienced a sharp downturn over the past 24 hours, with Bitcoin (BTC) falling below the $100,000 mark and Ethereum (ETH) declining by 5%. This sell-off has led to $532 million in liquidations, according to data from Coinglass.
As a result, several major altcoins, including XRP ($XRP ), Stellar ($XLM ), and Hedera ($HBAR ), have suffered notable losses, each declining by over 6%, per CoinMarketCap data.
Factors Driving the Market Downturn
One of the primary factors contributing to the decline is the shift in Bitcoin dominance, which has exhibited a significant technical pattern. Since January 13, Bitcoin dominance has been forming a rising wedge pattern on the four-hour chart, a structure that often signals a potential reversal.
On January 30, BTC dominance broke below the wedge at 59.40%, confirming a bearish signal. Following this breakdown, dominance initially fell to 58.62% before rebounding to retest the previous support level, which has now turned into resistance at 59.71%. As of today, BTC dominance has settled at 59.64%.
This retest appears to have triggered the ongoing altcoin correction, as investors shift capital away from altcoins amid uncertainty regarding BTC’s next move.
Can Altcoins Recover?
A sustained rejection of BTC dominance at current levels could signal a reversal in the altcoin market, leading to a potential recovery. If BTC dominance resumes its downward trajectory, it would confirm the breakdown of the rising wedge pattern, potentially igniting a strong rebound for XRP, XLM, HBAR, and other altcoins in the coming days.
However, traders should closely monitor BTC dominance for further developments. A continued decline would indicate renewed strength for altcoins, while a breakout above the resistance level could invalidate the bearish wedge pattern. In such a scenario, prolonged pressure on altcoins may persist, potentially suggesting market manipulation.
As the market remains volatile, investors should exercise caution and closely track Bitcoin’s dominance and broader market trends to assess the likelihood of an altcoin resurgence.