Cryptocurrency Market Plunges Amid Speculation of Emergency Rate Cut
The Impact of Recent Market Turbulence
As the Asian session opened, cryptocurrency markets were met with steep losses, causing the overall market value to plummet by 12.5% to approximately $1.97 trillion. This marks the first time since mid-February that the market value has dipped below $2 trillion.
The Fed’s Stance and Market Jitters
Speculation of an emergency rate cut by the Federal Reserve amid market uncertainty has thrown the cryptocurrency market into chaos. Bitcoin, the leading cryptocurrency, has seen its price drop below $60,000, currently trading at $53,399, reflecting a 10.8% decrease over the past 24 hours. Similarly, Ethereum, the second largest cryptocurrency, has tumbled by 21.2% and is trading at $2,306 after briefly hitting $2,240.
The Ripple Effect and Market Sentiment
Ethereum’s sharp decline has had widespread repercussions throughout the ecosystem. On-chain data reveals that as Ethereum’s price dipped, gas fees soared, potentially leading to significant liquidations in decentralized finance protocols. The fear and greed index for the Cryptocurrency Market has plummeted to 26, signaling a “fearful” state and reflecting the growing pessimism in overall market sentiment.
Industry experts attribute this recent downturn to macroeconomic conditions, as central banks adopt hawkish stances and the Federal Reserve remains cautious about interest rate adjustments. Concerns abound about the need for aggressive monetary policy easing to stave off a looming recession. Many traders now anticipate an emergency rate cut by the Federal Reserve in 2024, with the likelihood increasing by 11% in the past 24 hours according to PolyMarket data.
