Why is crypto down today – Analyzing key factors behind the market trend
LIBRA scandal, rising BTC dominance and macro uncertainty has exerted more bearish pressure on crypto market.
- Crypto’s weak market sentiment has extended into the new week.
- BTC could soon enter the next leg of the bull run, per Bernstein analysts.
Crypto extended its weekend losses into the new week as market cap dropped from $3.3T to $3.15T. That’s a $150B wiped out from the market in three days.
Over the same period, Solana[SOL] dumped the hardest. It shed 15% and slipped below $170 at press time. XRP followed with an 8% decline but was still above $2.5.
However, Bitcoin [BTC] decreased by less than 3% while Ethereum [ETH] retracted only 2%, signaling strong performance during extended weakness.
LIBRA worsens market sentiment
The crypto market has been muted under macro uncertainty but worsened by the LIBRA meme-coin ‘scam’.
Commenting on the daily market performance, crypto options trading desk, QCP Capital noted,
“BTC dominance has risen to ~60%, reaching four-year highs as #ETH and other altcoins continue to underperform. The recent $LIBRA “rug pull” scandal involving Argentinian President Javier Milei has further dampened sentiment around altcoins and memecoins.”
Besides, BTC’s upside has been capped since the January hawkish Fed interest rate pause.
In fact, Fed governor, Patrick Harker recently maintained the hawkish stance. Harker called for keeping interest rates steady until inflation moderates.
The bearish pressure has kept the king coin below $100K for nearly two weeks, but BTC Dominance (BTC.D) has shot above 60%, further blocking the rebound of altcoins.
Interestingly, analysts like Realvision’s Jamie Coutts projected another flush could be likely before BTC bounces.
“Now some solid protocols are down 50-80%. Two weeks ago we had a decent flush and high liquidation day. Sentiment is horrible. Probably going to see one more decent flush.”
Despite the boring markets, Bernstein analysts, led by Gautam Chhugani, made a bullish call for BTC in the medium term. The analysts said,
“The next leg of the Bitcoin bull market is loading up with a confluence of several positive catalysts…We believe the Crypto Task Force (led by David Sacks) is focused on delivering the National Bitcoin reserve, upon the direction of the President.”
They projected that the US Sovereign Wealth Fund (SWF) could include BTC and other crypto as reserve assets.
