A crypto crash continues, with Bitcoin falling below $105,000 and daily liquidations jumping by over 115% in the last 24 hours. Ethereum and most altcoins have plunged, with some of the top laggards being Launch Coin, Spark, SPX6900, and Kekius Maximus.
Crypto Crash Fueled by Iran and Israel War
The main reason why the crypto crash is happening is that the crisis in the Middle East is accelerating. Israel and Iran continued exchanging missile attacks overnight, while Donald Trump signaled that the US may get involved.
In a Truth Social post, Trump insisted that he would not allow Iran to have a nuclear weapon and that Israel maintained air control over Iran. Most notably, he hinted that the US would support killing Iran’s Supreme Leader.
These events have led to concerns that the crisis will escalate into a full-blown war. This, in turn, will lead to fear among traders and higher inflation as crude oil prices surge. Indeed, recent data shows that Brent and West Texas Intermediate (WTI) have surged above $76.
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Bitcoin and Altcoins Crash Ahead of FOMC
The ongoing crisis in the Middle East is happening as the Federal Reserve prepares to deliver its interest rate decision. Economists anticipate the bank’s officials to leave interest rates unchanged between 4.25% and 4.50%.
The cautious tone is happening because the bank remains cautious about inflation in the US. Recent data showed that the headline and core Consumer Price Index (CPI) rose to 2.4% and 2.8% in May, remaining comfortably above the bank’s target of 2.0%.
There are also concerns that the US is in a state of stagflation, which is characterized by high inflation and slow growth rate.
Data released on Tuesday showed that the US retail sales and industrial production plunged in May. This means that the US may have another quarter of negative growth, which is the real definition of a technical recession.
Therefore, the Federal Reserve may be hawkish, hurting risky assets like Bitcoin and altcoins.
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Bitcoin Price Double-Top Pattern
BTC price chart | Source: TradingView
The other main reason why the crypto crash is happening is that Bitcoin has formed a double-top pattern at $110,500 and a neckline at $100,350, its lowest point on June 5.
A double-top pattern points to more downsides, initially at $100,000. A break below $100,000 may have it drop to $95,000, which will trigger more downside in the coming weeks. Altcoins always drop when Bitcoin is falling.
This retreat will be part of the formation of the handle section of the cup-and-handle pattern, a common bullish sign.
