Solana and Dogecoin lead crypto declines as traders warn of ‘big losses’ ahead

Cryptocurrency markets have lost around 12% of total value in the last 24 hours amid weak macroeconomic sentiment and internal systemic risk, reaching levels of market capitalization not seen since January 2021.

Bitcoin (BTC) is down 13% to below $25K, its lowest in over 18 months, while Ethereum (ETH) is down 18%. Dogecoin (DOGE) has seen losses of 21%, while Solana (SOL), Polkadot (DOT) and XRP (XRP) have lost at least 16% in the last 24 hours.

The top 100 cryptocurrencies by market capitalization recorded average losses of 15%, the data shows.

Despite the drop, cryptocurrency futures only saw $1 billion in liquidations – a relatively low figure compared to previous liquidations when prices didn’t move as much. This suggests that the decline was led by spot selling.

The weakness in cryptocurrencies came amid poor U.S. Consumer Price Index (CPI) data for May released last week.

Inflation rose to more than 8.3% last year, according to the U.S. government, causing traders to price further interest rate hikes of more than 175 basis points through September, implying two half-point hikes and one 75-point hike. -base, according to Bloomberg.

That analysis led to a drop in global assets on Monday, with Asian stock indices ending the day down more than 3%. Europe’s Stoxx 600 is down 2.2%, as is Germany’s DAX index. US stocks are down about 3%.

Strong losses ahead

Traders said they expect cryptocurrency prices to continue falling until market conditions improve.

“We may be facing even more serious losses in the future. Economic growth is clearly slowing and reports already suggest that the US could have a recession next year,” Manuel Ortiz-Olave, co-founder of equity token company Brickken, told CoinDesk.

“Higher inflation will continue to force higher interest rates, and higher interest rates are also negative for economic growth,” he continues.

Also Read: Shares of Microstrategy, Coinbase and Crypto Miners Fall Up to 25% on Market Panic Day

“Some of the most important companies in the world, such as Apple, Microsoft or Nike, have already reported sales slowdowns, and Tesla has indicated that layoffs will occur soon. These are clearly negative headlines, which, combined with higher food and fuel prices, make people more careful with their savings,” Ortiz-Olave said, explaining that a slowdown in consumer spending would lead to a loss of revenue for large companies.

Meanwhile, possible systemic risk from within the crypto market contributed to the drop in sentiment, with cryptocurrency lending network Celsius bringing withdrawals to a halt.

The company allows users to earn more than 17% returns on their cryptocurrency holdings and cited “extreme market conditions” as one of the factors behind its decision. This led to severe criticism among market watchers on Twitter.

Elsewhere, a Decentralized Autonomous Organization (DAO) dedicated to the Tron ecosystem has deployed $2 billion in funding to hedge against a potential drop in the prices of its TRX tokens.

This Monday’s drop appears to have leveled off with Bitcoin around $24,000 at the time of writing.

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