The crypto market took a major hit during early Asian trading hours. According to CoinGecko, the total market cap has plunged by 12.5%, now sitting at about $1.97 trillion. This is the first time since mid-February that the market cap has dipped below the $2 trillion mark.
Bitcoin, the largest cryptocurrency, dropped below $60,000, now trading at $53,399. This marks a 10.8% drop in just 24 hours. Ethereum, the second-largest cryptocurrency, fell even more sharply, down 21.2% to $2,306, after briefly hitting $2,240.
Ethereum’s fall has affected its entire network. As its price slid to nearly $2,100, gas fees surged to 710 gwei, with the current average at 350 gwei. Crypto journalist Colin Wu warns that further declines could lead to large-scale liquidations in DeFi protocols.
The broader impact is clear from the liquidation numbers. Coinglass reports that over $800 million has been liquidated in the past 24 hours—$699.45 million from long positions and $100.56 million from short positions. The largest single liquidation, worth $27 million, occurred on Huobi with a BTC-USD pairing.
The crypto market’s fear and greed index has dropped to 26, reflecting a state of “fear.” This gauge of market sentiment shows a growing bearish outlook.
Experts point to recent macroeconomic events for the downturn. The Bank of Japan’s unexpected hawkish stance and the US Federal Reserve’s cautious approach to rate cuts have added to market uncertainty.
Despite expectations, the Fed’s reluctance to cut rates in September has led to a rush for safer investments due to weak US economic data. This delay has raised concerns that the Fed may need to act aggressively to avoid a recession.
However, some crypto traders believe the current climate might push the Fed to make an emergency rate cut in 2024. Data from Polymarket shows that the odds of such a cut have risen by 11% in the last 24 hours.
