A painful crypto crash is ongoing as traders wait for crucial economic data and the Federal Reserve interest rate decision. It is also happening as traders take profits after most altcoins jumped by double digits earlier this month.
Shiba Inu price has crashed by over 18% from its highest point this month. Similarly, Bonk, the popular Solana meme coin, has moved into a bear market after falling by over 30% from its July high. Treehouse (TREE), a player in decentralized finance, has crashed by over 30% in the last 24 hours.
Consequently, the market capitalization of all cryptocurrencies tracked by CoinGecko has plunged from over $4 trillion to $3.9 trillion today, meaning that investors have shed over $100 billion in value.
Crypto Crash is Happening Because of Bitcoin Consolidation
The main reason for the ongoing crypto crash is that the Bitcoin price continues to consolidate at $118,000. Bitcoin is usually the main catalyst for all altcoins; when it rises by 1%, many of them instantly enter a bull market. When it wavers, most of them plunge.
Fortunately, Bitcoin has strong fundamentals, including rising ETF inflows and the formation of a bullish pennant pattern. That is a sign that it will ultimately rebound and lead to more gains, which may trigger an altcoin rally.
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Federal Reserve and Macro Data
The other reason why the crypto market is crashing is that market participants are waiting for the Federal Reserve to raise its interest rate. Historically, cryptocurrencies and other assets waver ahead of a Fed decision.
This decision comes at a crucial time, as the trade war is expected to intensify. Also, the Fed is under pressure from Donald Trump, who has pushed it to cut interest rates by 300 basis points. He argues that the US has no inflation and that the high rates were costing the economy $1 trillion in interest payments.
The Fed decision comes as the US publishes crucial economic data. It will publish the latest GDP and ADP jobs report today, July 30, and the personal consumption expenditure (PCE) report on Thursday. Finally, the US will release the nonfarm payrolls data on Friday.
At the same time, the decision comes as hundreds of companies in the S&P 500 Index, including many in the Magnificent 7, publish their earnings. It is common for stocks and the cryptocurrency market to fluctuate when there are numerous events.
The other reason for the crypto crash is that investors are now taking profits as tokens like Shiba Inu and Bonk surged by double digits.
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