The crypto market continued to stay in the red, sparking discussions among market participants. During writing, the broader market cap had lost nearly 1%, with the fear and greed index showing a “Fear” sentiment in the market. This fear and greed index itself explains the plunge in crypto prices, indicating that traders are cautious towards the digital assets. Besides, it has also fueled concerns among market watchers, with many looking for potential reasons behind the recent selloff. Meanwhile, experts have cited a flurry of crypto news factors that might have weighed on the traders’ sentiment. For context, the waning institutional interest, the conditional approach of the US Federal Reserve, and profit-bookings are among the top reasons that might have contributed to the recent losses. So, let’s take a quick tour of the likely reasons behind the crypto market retreat and see what may lie ahead for the crypto prices.
Fed Policy Uncertainty Sparks Crypto Market Retreat
The global crypto market cap fell around 1% to $3.69 trillion at the time of writing. However, the latest data showed a rebound in BTC price, which passed the $110k mark again, indicating a shifting focus of the traders. However, the Fear and Greed Index showed a score of 31, indicating a “fear” sentiment among traders. Having said that, it appears that traders are taking a cautious approach towards crypto prices. Meanwhile, the recent US FOMC has made headlines in the crypto news column.
For context, the US Federal Reserve has announced a 25 bps rate cut at its latest gathering, which has initially sparked optimism among traders. However, Fed Chair Jerome Powell has fueled concerns in his speech, indicating a cautious approach by the central bank. For context, Powell recently noted that the central bank would evaluate the upcoming economic data before deciding their policy rate plans. This has fueled concerns among crypto market traders, while fueling uncertainty over the previously expected rate cut in December.
In addition, the analysts have noted that the crypto prices tend to perform volatile trading after the US FOMC meetings. This is also evident in the latest report from CryptoQuant.
Institutional Interest & Whale Bets
In addition to the Fed policy uncertainty, the waning institutional interest has further fueled concerns. According to Farside Investors’ data, the US Spot Bitcoin ETF recorded nearly $1 billion outflow over the past two days. This indicates that the institutions are also shifting their focus from Bitcoin, causing a broader crypto market selloff.
During writing, the crypto prices in total recorded a liquidation of $700 million as per CoinGlass data. This also comes in tandem with the latest crypto news featuring experts citing profit-booking as a key reason behind the selloff. For context, the crypto market’s robust rally over the past few months has allowed traders to book massive profits and caused a crypto prices selloff.
However, despite that, the lower interest rates and alleviating trade tensions between the US and China could spark a rebound in the crypto market. For context, the latest comments from Donald Trump hint at easing concerns. Having said that, investors should exercise due diligence amid the ongoing gloomy momentum in the market.