In the European market on Tuesday (April 2), Bitcoin fell to US$66,500, and a 5% flash crash occurred during the Asian session, resulting in the liquidation of US$165 million in leverage. An index of small-cap cryptocurrencies posted its biggest drop in two weeks as analysts warned that the impact of a retracement of U.S. interest rate cuts was pricing in looming. Ripple revealed that the SEC lawsuit has once again triggered a panic over altcoins as securities.
Fed rate cut pricing retracement Bitcoin 5% flash crash hits market
Traders with leveraged exposure to Bitcoin and other cryptocurrencies lost more than $165 million in less than two hours following the Bitcoin flash crash.
CoinGlass data shows that Bitcoin’s sharp decline resulted in the elimination of more than $165 million in leveraged positions, of which Bitcoin longs accounted for slightly more than $50 million and Ethereum more than $40 million, with longs accounting for the majority.
Approximately $6 million in Dogecoin long positions, and $4 million in SOL tokens were liquidated, trailing Bitcoin and Ethereum. 🐍Skirt＋褳：362014583
According to the FX168 statistical chart, the total net inflow of the U.S. Bitcoin spot ETF reversed, with a net outflow of US$85.8378 million on Monday.
Capital inflows were dragged down by an outflow of $302 million from Grayscale's GBTC, but BlackRock IBIT's inflow of $165.9 million and Fidelity's inflow of $44 million supported the situation.
At the same time as the Bitcoin flash crash, data from CoinGecko and Google Finance showed that USDT, which was pegged to the US dollar, fell steadily from US$1 to US$0.988, triggering a short-term decoupling market.
It’s unclear whether USDT’s fluctuations are the result of some data tracker API errors, or if the currency’s value has suddenly dropped. However, the brief decoupling did not appear on other price trackers.
As Bitcoin falls, the market for meme coins has also been greatly affected. Meme coins such as MFER, PEPE, WIF and BONK, which have been popular in the market in the past few days, have all fallen by more than 10% in the past 24 hours, which has made small The market capitalization crypto asset index suffered its biggest drop in two weeks on Monday.
In this regard, Stefan von Haenisch, head of trading at OSL Group, a digital asset company in Singapore, said that the decline of cryptocurrencies was affected by pessimistic estimates of the prospect of interest rate cuts by the Federal Reserve.
He explained: “The prospect of fewer rate cuts from the Federal Reserve is having an impact on the entire cryptocurrency space. As the week began, there was a sell-off in the cryptocurrency space. No sector was unaffected, especially those whose prices have performed over the past six months. Sectors that are better than Bitcoin, such as meme coins.”
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, recently expressed a cautious view, suggesting that the Fed should only cut interest rates once this year. He explained that as the economy continues to exceed expectations and shows unexpected resilience and vitality, this has prompted him to reassess his view of the economic outlook.
In addition, given that U.S. inflation has exceeded expectations, the job market has maintained steady growth, and the stock market has shown a strong upward trend, if these conditions remain unchanged, some economists and professional investors believe that even if the Federal Reserve cuts interest rates before the end of the year, the number of interest rate cuts will be limited. It may be less than the current three rate cuts expected by central bank policymakers and the market, but no more than one rate cut, or even no rate cuts at all.
Global market strategists at JPMorgan Chase pointed out that it is not easy to control inflation under such a background that the rising stock and cryptocurrency markets have added trillions of dollars to investors' paper wealth. The bank mentioned: "From historical experience, such loose monetary policy is often the main factor driving up the consumer price index. Therefore, investors should be mentally prepared for interest rates to remain at high levels for a long time."
CoinPedia analysis said that the question now is whether the Bitcoin price will remain consolidated before the Bitcoin halving, or whether this is a trap to capture shorts.
The daily chart for Bitcoin price is trading within a parabolic curve, with an eventual touch of the curve’s lower support expected to trigger a rebound. But with the recent pullback, market sentiment has turned bearish, suggesting traders are becoming increasingly fearful. Therefore, this suggests that the rally is far from euphoric and the cycle appears to be in its early stages.
Bitcoin’s short-term trading suggests that the price is currently well below resistance levels around $71,324.33, as bulls face obstacles in breaking through these levels. From this, trading moved into lower support levels, which put bearish pressure on the coin. The selling volume has also increased, so a sub-$66,000 move is possible.
Furthermore, the possibility of a rebound has also emerged, with the RSI having hit lower support levels and a bullish divergence could soon emerge. This could lead to the price starting to move bullish and revisit levels above $71,000. However, the bulls are expected to show strong strength at these levels, which could push the price to new highs, possibly close to $80,000 before the halving. After the event, Bitcoin is believed to maintain its sharp rise and move towards higher targets.
SEC securities war ‘scares’ Ripple traders
Ripple chief legal officer Stuart Alderoty reviewed SEC filings in the Coinbase lawsuit and tweeted that the regulator provided 4 different and “confusing” definitions of what constitutes a crypto ecosystem.
He wrote: “After Judge Analisa Torres, who handled the Ripple case, reviewed the full evidentiary record, she understood that the SEC had departed from the Howey Test, in which promoters make decisions directly to investors regarding a clearly defined enterprise. promise."
FXStreet highlights that Ripple’s (XRP) “security” status is at risk, having been rejected by two U.S. federal judges.
The ruling that Ripple is not a security appeared in July 2023, but now, Ripple is once again involved in the battle over the definition of securities, which means that other cryptocurrencies that are also “altcoins”, such as Ethereum, are also There will be another panic.
FXStreet analyst Ekta Mourya said that Ripple is trading sideways in a tight range between $0.5670 and $0.6686, which are key support and resistance for Ripple on the daily chart, respectively. The recent decline appears to have some momentum, as the red bar below the neutral line of the Momentum Oscillator (AO) and the Relative Strength Index (RSI) both fell below its 50 midline, supporting the bearish thesis.
Ripple price is likely to sweep the support at $0.5386, an important support level on the daily chart, and gather liquidity before attempting a rebound to test the resistance at $0.6686. A daily candlestick close below $0.60 could also trigger a drop to the January 31 low of $0.4853.
A close above the 50% Fibonacci level of $0.6147 would invalidate the bearish thesis for XRP. On its way to its year-to-date peak of $0.7440, XRP is facing resistance at $0.6686.
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