The cryptocurrency market experienced a notable downturn on Thursday, following a period of cautious fluctuations. The shift was primarily driven by robust U.S. economic indicators that dampened prospects for further interest rate reductions by the Federal Reserve.
Bitcoin (BTC) fell below the $111,000 mark, trading at approximately $110,300, reflecting a decline of 3% for the day. Ethereum (ETH) saw a steeper drop of 6.5%, settling under $4,000 at around $3,910, marking a significant 15% decrease over the past week.
In the broad landscape of altcoins, Solana experienced the hardest hit, plummeting by 8% to a price of $197. Other notable declines included XRP, down 6% to $2.78, and BNB, which dropped 5% to $968. Overall, a vast majority of the top 100 digital currencies by market capitalization are facing losses, with Story (IP) being the day’s biggest casualty, falling 28% to $8.73.
Analysts from Glassnode noted a weakening in Bitcoin’s accumulation trend score, indicating a lack of buying conviction from significant investor groups. This trend raises potential concerns about the market’s susceptibility to supply challenges unless demand increases significantly. They also highlighted that Bitcoin’s price has dipped below the 0.95 cost basis quantile, an area often associated with profit-taking. “A successful return above this threshold could indicate a rebound in market strength, but failing to do so may lead to support levels between $105,000 and $90,000,” they stated in a recent update.
On the brighter side, QCP Capital analysts released a research note projecting that the crypto market might show improved performance in the fourth quarter, traditionally considered a more favorable time for the sector. They mentioned that participants are currently anticipating two additional rate cuts of 25 basis points each in October and December.
In the last 24 hours, the crypto market saw extensive liquidations, totaling over $800 million in leveraged positions. This figure is nearly three times that of the previous day. Ethereum led this wave of liquidations with over $330 million liquidated, while Bitcoin saw around $145 million wiped out. Other altcoins collectively accounted for more than $73 million in liquidations, as reported by CoinGlass.
Meanwhile, the flow of capital into spot ETFs has shown contrasting trends. Ethereum ETFs experienced outflows for the third consecutive day, with $79.3 million exiting on September 24th, according to SoSoValue data. Conversely, Bitcoin spot ETFs attracted over $241 million in inflows, suggesting a growing interest in Bitcoin investments despite the broader market downturn.
On the macroeconomic front, the U.S. Bureau of Economic Analysis recently revised its estimate for the second-quarter gross domestic product (GDP) up to 3.8%, indicating stronger economic growth than earlier assessments. Even with this positive outlook, signs of a cooling labor market are emerging, as evidenced by weekly jobless claims dropping to 218,000. However, S&P Global’s surveys are reflecting diminished activity in both manufacturing and services, contradicting expectations of 235,000 claims as forecasted by economists polled by Reuters.
As the crypto market grapples with these recent developments, investors remain watchful for any shifts that may signal a turnaround or further declines in the coming days.
