Bitcoin Plunges to 6-Month Low Amid Fading US Fed Rate Cut Hopes; Other Cryptos Follow

Bitcoin, the world's largest cryptocurrency, has fallen to its lowest point in six months, trading at $94,859.62. This represents a 1.04% drop in the last day and has erased over 30% of its gains from earlier this year. The cryptocurrency had previously surged past $126,000 in October but has now entered bear market territory. Major altcoins also saw declines, with Ethereum trading at $3,182.03, Solana moving slightly down, and Cardano losing nearly 0.5%. Market watchers attribute this downturn to a rise in market volatility and large liquidations. Edul Patel, CEO of Mudrex, noted Bitcoin's attempt to stabilize around the $93,000 mark, citing potential short-term volatility from US tariff cut signals. However, he observed an increase in long positions by whales and market makers since Wednesday. Resistance is seen around $99,000, with support forming at $92,700. Riya Sehgal, Research Analyst at Delta Exchange, described the crypto market sentiment as 'risk-off', mirroring global asset pullbacks. Over $700 million in liquidations occurred in the past day as traders reduced leverage amid softer expectations of monetary easing. Sehgal also pointed out that long-term Bitcoin holders are booking profits, a trend often seen at the end of market phases. Key resistance levels for Bitcoin are between $101,500 and $103,200, with crucial support around $98,500. The overall market sentiment remains defensive due to rising global uncertainty, suggesting continued volatility.

Impact

This news significantly impacts cryptocurrency investors, potentially leading to losses and reinforcing a cautious market sentiment. It may also affect sentiment in broader speculative markets, but direct impact on traditional Indian stock markets is limited unless it triggers wider financial instability. Rating: 6/10.

Explanation of Terms:

• Cryptocurrency: A digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double-spend.
• Federal Reserve: The central banking system of the United States.
• Interest Rate Cuts: A reduction in the benchmark interest rate by a central bank, typically to stimulate economic activity.
• Volatility: The degree of variation of a trading price series over time, measured by the standard deviation of logarithmic returns. High volatility means prices can change dramatically and rapidly.
• Liquidations: In financial markets, liquidation refers to the process of converting an asset into cash. In crypto trading, it often refers to a forced closure of a leveraged position when the margin account is depleted to cover losses.
• Risk-off Sentiment: A market mood where investors are cautious and tend to move their money from riskier investments to safer assets like government bonds or gold.
• Whales: Individuals or entities that hold a very large amount of a particular cryptocurrency.
• Support: A price level at which a declining asset's price is expected to stop falling and reverse due to a buildup of buying interest.
• Resistance: A price level at which a rising asset's price is expected to stop increasing and reverse due to a buildup of selling interest.