Why is the crypto market collapsing today, is Bull overwhelmed?

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The crypto market recorded a sharp drop during the European market open period. The prices of major cryptocurrencies Bitcoin and Ethereum fell almost 2% in just a few hours, losing earlier gains.

Altcoins followed suit, bringing a market-wide correction to the crypto market ahead of a key week with the Fed’s rate hike decision and quarterly results from the tech giants.

Why Did the Crypto Market Witness a Sudden Drop?

Traders were expecting a correction in Bitcoin price as the rally lacked pullback. Bitcoin price continued to rise and even broke through its 200-DMA, rallying 40% in January.

Additionally, investors remain cautious ahead of a busy week of corporate earnings and central bank meetings, marked by expected rate hikes from the US Federal Reserve, European Central Bank and Bank of England.

According to CME FedWatch Tool, there is a 97.9% chance of a 25 basis point rate hike by the Fed at the FOMC meeting. However, a 50 basis point rate hike is still on the table and Wall Street economists say investors need to wait a bit longer for the Fed’s pivot.

Meanwhile, the European Central Bank plans to propose interest rate hikes of 50 basis points in February and March. Policymakers are pushing to control inflation as the risk of a global recession rises.

Also Read: Janet Yellen and Elon Musk Warn of Severe Recession, Will Crypto Crash Again?

Bitcoin and Altcoins fell suddenly

Bitcoin price is currently trading at $23,259, after falling 2% in a few hours. The 24-hour low and high are $23,166 and $23,919. The price of BTC hit a high of $23,861 on Sunday.

Ethereum’s price also fell by 2%, with the current price trading at $1,592. The best altcoins such as XRP, DOGE, MATIC, ADA, etc. have plunged more than 3% in the past 24 hours.

Despite a drop in the US Dollar Index (DXY) to 101.68, crypto prices saw a correction. Thus, this indicates that investors sold off their crypto holdings ahead of the Fed rate hike.

Also Read: Legendary Trader Peter Brandt Predicts Next Move as Bitcoin Price Hits $23.5,000

Varinder is a technical writer and editor, technology enthusiast, and analytical thinker. Fascinated by disruptive technologies, he shared his knowledge on blockchain, crypto-currencies, artificial intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for a substantial period of time and currently covers all the latest updates and developments in the crypto industry.

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.

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