The cryptocurrency market has recently experienced a surge in volatility, leading to over $150 billion in value vanishing in a single day. What factors precipitated this latest dramatic downturn ?
Bitcoin, the cryptocurrency market’s driving force, has been hit hard by this wave of selling. The leading crypto dropped by 3%, falling below the symbolic threshold of $110,000, reaching a low of $108,700. This sharp decline has resulted in a loss of more than $20 billion in market capitalization.
Ethereum, the second-largest cryptocurrency by market cap, has also suffered, dropping below the $4,000 mark to finish at $3,832. Its market capitalization has melted by 15% in one week, down to $470 billion. Other major altcoins like XRP, BNB, or Solana have experienced similar setbacks.
This new market downturn can be explained by a marked return of risk aversion among investors. Recent statements from the US Federal Reserve Chairman, Jerome Powell, regarding the fragility of the labor market and persistent inflation have rekindled fears of imminent stagflation.
Faced with these bleak economic prospects, investors have massively withdrawn from risky assets like cryptocurrencies. According to market data, more than $1.7 billion in leveraged positions were liquidated on September 24th and 25th, causing an accelerated drop in prices.
Technically, the crypto market now finds itself at a critical level. If Bitcoin falls below $107,000, a decline to $100,000, an important psychological threshold, becomes likely. For Ethereum, the next support level is at $3,750, while XRP investors are closely monitoring the $2.71 level.
The upcoming major economic data will be decisive for price evolution. The publication of US PMI indices on September 30th and weekly jobless claims figures on October 2nd will be closely scrutinized. Disappointing figures could rekindle risk appetite, while good performance would strengthen selling pressure.
Gaston has been a writer for over 7 years and a passionate cryptocurrency enthusiast since 2020. He loves exploring the crypto ecosystem and is now dedicated to sharing his insights and discoveries through InvestX.
DISCLAIMER
This article is for informational purposes only and should not be considered as investment advice. Trading cryptocurrencies involves risks, and it is important not to invest more than you can afford to lose.
InvestX is not responsible for the quality of the products or services presented on this page and cannot be held liable, directly or indirectly, for any damage or loss caused by the use of any product or service featured in this article. Investments in crypto assets are inherently risky; readers should conduct their own research before taking any action and invest only within their financial means. This article does not constitute investment advice.
Risk Warning : Trading financial instruments and/or cryptocurrencies carries a high level of risk, including the possibility of losing all or part of your investment. It may not be suitable for all investors. Cryptocurrency prices are highly volatile and can be influenced by external factors such as financial, regulatory, or political events. Margin trading increases financial risks.
CFDs (Contracts for Difference) are complex instruments with a high risk of rapid capital loss due to leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should assess whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Before engaging in financial or cryptocurrency trading, you must be fully informed about the associated risks and fees, carefully evaluate your investment objectives, level of experience, and risk tolerance, and seek professional advice if needed. InvestX.fr and the InvestX application may provide general market commentary, which does not constitute investment advice and should not be interpreted as such. Please consult an independent financial advisor for any investment-related questions. InvestX.fr disclaims any liability for errors, misinvestments, inaccuracies, or omissions and does not guarantee the accuracy or completeness of the information, texts, graphics, links, or other materials provided.
Some of the partners featured on this site may not be regulated in your country. It is your responsibility to verify the compliance of these services with local regulations before using them.
