Cryptocurrency Prices Plummet with Bitcoin Leading a $700 Million Liquidation

Key Highlights:

Dogecoin (DOGE), Ether (ETH), and Bitcoin (BTC) saw notable declines, with Bitcoin dropping below $80,000, resulting in a $700 million loss from long positions.
Investor sentiment is cautious due to reduced expectations for a Federal Reserve interest rate cut and ongoing uncertainties in the U.S. economy.
This decline is part of a two-week trend influenced by global market sentiment, trade tariffs, and fears of a recession.

Market Overview

Dogecoin (DOGE) and Ether (ETH) plunged by 9% in just 24 hours, while Bitcoin (BTC) slid by 4.5%. This led to a substantial sell-off, resulting in losses of $420 million in Bitcoin longs, $150 million in Ether longs, and $30 million in Dogecoin long positions. Additionally, Solana (SOL) decreased by 8%, and XRP declined by 7%, with the broader CoinDesk 20 index dropping more than 6.5%.

Open interest in Bitcoin futures saw a 7% decrease, amounting to $45 billion, as traders faced margin calls.

“Investors are taking a risk-off approach as the chances for a Federal Reserve interest rate cut diminished after a stable jobs report…” — Nick Ruck, Director at LVRG Research.

Monday’s losses add to a worrying two-week downward trend, amplified by negative global sentiment, contributing factors such as the S&P 500 dropping by 2% and the Nasdaq experiencing a 3% decline. Notably, fears surrounding upcoming U.S. trade tariffs and a potential economic recession intensified after recent comments from Donald Trump.

This downturn marks the largest single-day drop in U.S. stocks since September 2022, culminating in an $830 billion loss in market value among the major tech stocks.

Amidst this turmoil, a strong U.S. dollar, coupled with signals from the Federal Reserve regarding fewer rate cuts in the coming years, continues to dampen recovery hopes in the immediate future.

Despite the challenges, some contrarian indicators suggest limited hope for recovery, with the Crypto Fear & Greed Index reflecting extreme fear at 15, hinting at possible capitulation conditions that could lead to a rebound in the near term.

Singapore’s QCP Capital noted that observing Treasury yields and dollar strength may provide insights into market positioning moving forward.