A crypto market crash happened on Thursday as Bitcoin and most altcoins plunged. Bitcoin plunged by over $7,000, while top altcoins like Cardano, Chainlink, and Solana plunged by over 5% from their top. So,is this the end of the recent crypto pullback or a mere retracement?
Why the Crypto Market Crash Happened?
The ongoing crypto crash happened after Bitcoin price surged to a record high of $124,500. Its surge also helped to push other tokens upwards, making bull trades more dominant.
However, a closer look at Bitcoin’s daily chart shows that it formed a double-top pattern at $123,200 and a neckline at $112,000. This is one of the most common bearish patterns in technical analysis, and is partly to blame for the ongoing crypto market crash.
The other reason, which also explains why the stock market plunged, is that the US published strong inflation report that pointed to a stagflation.
This report revealed that the monthly core producer price index (PPI) rose to 0.9% in July, translating to an annual increase of 3.7%. The headline PPI jumped from 2.5% to 3.3%.
Similarly, a report released earlier this week showed that the core CPI rose to 3.1%. Therefore, there are signs that Trump’s tariffs are having an impact on the labor market and inflation, which may lead to stagflation.
Stagflation is a period characterized by high inflation and slow economic growth. It is usually more difficult to manage because cutting rates leads to higher inflation, while boosting the economy.
In this regard, the crypto market crash happened as investors scaled down their hopes of a Federal Reserve interest rate cut. There is a likelihood that the bank will maintain high interest rates in the September meting.
These events triggered a major liquidation and panic selling among investors who wanted to book profits, leading to more downside. Total liquidations jumped by over 90% to over $1.2 billion.
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Is this the End of the Crypto Bull Run?
The question is whether the ongoing crypto market crash marks the end of the bull run. While it is hard to predict, there are chances that the bull run has more room to go.
First, Bitcoin price rally is never in a straight line. It is a common occurrence for the coin to retreat a bit after hitting a new all-time high. These pullbacks are normally pronounced when it nears or hits key psychological levels, in this case, $125,000.
Second, the crypto bull run is still intact because of the upcoming spot altcoin ETF approvals by the SEC. The agency will likely approve funds on tokens like HBAR, XRP, Solana, and Litecoin.
Further, while a rate cut may not happen in September, odds are high that the bank will cut this year and more in 2026 when Trump replaces Jerome Powell. Lower rates will likely boost the crypto market bull run.
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