The cryptocurrency market experienced a sharp selloff on Monday, wiping out $80 billion from its total market capitalization, which dropped from $2.1 trillion to $2.03 trillion. Major cryptocurrencies like Bitcoin and Ethereum saw sudden declines, driven by a combination of market uncertainty and a reported assassination attempt on Republican presidential candidate Donald Trump at his Florida golf club on Sunday.
The Crypto Market Fear & Greed Index fell from 51 (neutral) to 39 (fear), reflecting heightened anxiety among traders. Altcoins, including Solana (SOL), Ripple (XRP), Cardano (ADA), and Dogecoin (DOGE), followed the lead of Bitcoin and Ethereum, posting losses as well. Despite this, many traders remain cautiously optimistic as attention turns to the upcoming FOMC meeting and Federal Reserve Chair Jerome Powell’s decision on interest rates this Wednesday.
Why Is Bitcoin Price Dropping?
Bitcoin’s price decline comes amid cautious sentiment as traders brace for the Federal Reserve’s potential pivot on interest rates. Market analysts speculate that the Fed could implement its first rate cut since 2020, with a strong possibility of a 50 basis point (bps) cut.
According to the CME FedWatch tool, there is a 61% probability of a 50 bps rate cut, with a 39% chance of a 25 bps cut. The tool also indicates the likelihood of 125 bps in total rate cuts this year.
Prominent crypto analyst PlanB, the creator of the Bitcoin stock-to-flow (S2F) model, shared a chart showing that Bitcoin miners are struggling to maintain profitability after the recent halving event. PlanB warned that Bitcoin needs to double its current price to reignite a bull run, aligning with historical post-halving patterns where price increases sustain miner profitability.
Another analyst, Credible Crypto, pointed out that Bitcoin has retraced from its resistance zone of $61-62K and is currently holding above the $58,500 level, a key support that must hold to prevent further downside.
Data from Coinglass revealed nearly $35 million in Bitcoin liquidations, with $30 million from long positions. Bitcoin briefly touched a 24-hour low of $58,112 as traders sold when the price dipped below the 50-day simple moving average (SMA). The price has since stabilized around the $59,000 mark, but volatility is expected leading up to the FOMC meeting. If a 50 bps rate cut is confirmed, the market could see a sentiment boost, though price momentum will likely remain choppy.
Why Did Ethereum Price Fall Below $2,300?
Ethereum’s price decline can be partly attributed to a dormant whale becoming active after eight years and selling off a significant amount of ETH. This follows bearish moves by other large holders, including the Ethereum Foundation and Ethereum co-founder Vitalik Buterin, who also sold ETH recently.
Popular analyst Ali Martinez warned that Ethereum risks further decline if it fails to hold the crucial support range between $2,290 and $2,360. According to Martinez, approximately 1.9 million addresses hold 52 million ETH in this zone, making it a key area to watch. A break below this range could trigger a larger sell-off, potentially pushing the price down toward $1,800.
In the past 24 hours, ETH price has fallen 6%, trading at $2,308 at press time. Its 24-hour low and high were $2,290 and $2,360, respectively. The downturn in both Bitcoin and Ethereum has also dragged down altcoins like SOL, XRP, DOGE, and ADA. The market is now squarely focused on the FOMC meeting for guidance on future price direction.