The crypto world is abuzz again, but not because of all-time-high prices. Over the last 24 hours, the global crypto market lost over $100 billion in value, dropping from $2.77 trillion to $2.67 trillion. Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) all dropped significantly, spurring panic selling and nervous speculations. So, what’s really behind this sell-off in crypto?
Sentiment Shifts and Decline in Fear Index
Crypto has never been stable, and the Fear and Greed Index dropping to 24, deep within the “Fear” zone, speaks volumes about the sentiment of investors today. As sentiment turned bearish, most retail traders are closing their positions or avoiding new entries. The precipitous drop is also reflected in the plummeting altcoin index, which stands at 14, one of the lowest in its history.
Political Tensions Add Fuel to the Fire
Geopolitical events continue to influence financial markets, and crypto is no exception. Comments on tariffs by former U.S. President Donald Trump aimed at global trading partners shook not only the traditional stock market but also risk-sensitive assets like crypto. When recession indicators increase in Europe and Asia, risk-averse investors shift to safe assets like bonds and gold, selling crypto.
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On-Chain Activity Shows Weak Retail Interest
Based on Glassnode and Santiment data, new wallet development and active addresses for all three major cryptocurrencies have witnessed a sharp decline. This indicates that the activity of investors is declining. Meanwhile, whale wallets, which typically carry humongous amounts of coins, started selling their coins in massive amounts, contributing to the price declines. ETF Disappointments and Institutional Skepticism
While their initial approval was being hailed as a milestone, their recent trailing behind in the last month has left institutional players dismayed. March closed with both ETFs in the red, and April has not begun much better. Not being able to take off as expected is raising eyebrows regarding the long-term institutional demand for crypto.
Explanation of Major Price Supports
Bitcoin is at approximately $82,000 with a 5.6% intraday decline, wiping out months of gains. Ethereum dipped below $1,800, and XRP continues to drop below the $2 support level. With such major support levels broken, the likelihood of further losses is high unless buying pressure is regained.
In a sentiment-driven, headline, and high-risk speculation environment, it’s essential to stay grounded. While the present crash does seem sudden, history in crypto reminds us that correction comes before opportunity.
Also read: Crypto Expert Weighs In: Will XRP Ever Flip Ethereum? Here’s the Truth
