The crypto market is crashing today, with Bitcoin and most altcoins affected. Bitcoin moved below the $90,000 support level, while the market cap of all tokens is about to fall below the $3 trillion support level. Here are the top reasons behind the ongoing crypto crash today.
Crypto Market Crash Triggered by BoJ Rate Hike Jitters
One major reason the crypto market is crashing today is that the Bank of Japan (BoJ) is meeting later this week. Economists expect the bank to hike interest rates by 0.25%. A Polymarket poll places the odds of a cut at 98%.
A rate hike by the BoJ is important because it is one of the most influential central banks globally. It also comes at a time when the Federal Reserve is cutting interest rates, leading to a major divergence.
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The BoJ is also the biggest holder of US government bonds. As such, the divergence may lead to a rotation back to Japanese bonds. It may also hasten the winding down of the carry trade that has existed for years.
Indeed, studies show that Bitcoin’s price has tanked by double digits whenever the BoJ hikes rates. Most notably, as the chart below shows, this rate hike is coming as Bitcoin forms numerous bearish chart patterns, including a rising wedge and a bearish flag.
AI Bubble Risks Remain
The crypto market crash is also happening amid investor concerns about an AI bubble. These fears have led to a sharp decline of top stocks like Oracle, Nvidia, and Broadcom. Oracle stock has dropped by over 45% from its highest point this year.
Broadcom has tumbled by 13%, while Nvidia is down by nearly 20% from the year-to-date highs. As a result, the S&P 500 and Nasdaq 100 indices have failed to move above their all-time highs.
The jitters in the AI industry are affecting the crypto market because a stock market plunge would likely affect the industry.
October 10 Liquidation Jitters Remain
The crypto market crash is underway as investors remain jittery about the October 10 liquidations. Over 1.6 million traders were liquidated on that day, with over $20 billion being wiped out.
Since that day, crypto investors have embraced a risk-off sentiment. One way this is happening is through the sharp decline in futures open interest, which has moved from over $225 billion in October to $130 billion today.
At the same time, buyers have remained on the sidelines, with the Crypto Fear and Greed Index remaining in the red zone. Also, sellers have constantly stepped in whenever Bitcoin and other altcoins attempted to rebound.
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