The cryptocurrency market is going through a difficult period, and several factors contribute to this situation:
1. Reaction to the Federal Reserve's Monetary PolicyInterest Rate Cut:
Although the U.S. Federal Reserve has reduced rates by 25 basis points, this decision was already anticipated by the market.
The more cautious tone of Jerome Powell, who mentioned a cooling labor market and "slightly elevated" inflation, has raised concerns about possible stagflation.
Stagflation Sentiment:
Investors interpret the Fed's comments as a signal of increased economic risks, which weighs on assets considered riskier, including cryptocurrencies.
2. Drop in Market CapitalizationThe total market capitalization of cryptocurrencies has fallen by 5.6%, reaching approximately $3.05 trillion.
This decline indicates strong selling pressure and hesitance from buyers.
Massive liquidations (over 437 million dollars) on leveraged positions show that the market is under significant pressure.
3. Performance of Major AssetsBitcoin: Although it has lost 2.5% and fallen below $90,000, it remains above this critical threshold.
Staying above this level could indicate some stability.
Ethereum and Altcoins: Ethereum has decreased by 3.5%, while altcoins like Solana and Cardano have recorded even larger losses, reflecting a general downward trend in the market.
4. Special Case of Terra (LUNA)Contrary to the general trend, Terra (LUNA) experienced a significant increase of 44% due to enthusiasm around the new Terra 2.0 chain. This shows that some assets can still attract interest despite the overall market pressure.
