Sea of red as ICP, Dogecoin, Quant, and Hedera prices plunge
It was a sea of red in the cryptocurrency market on Tuesday morning as most cryptocurrencies tumbled. Bitcoin, the biggest crypto in the world, plunged to $65,000, triggering a major sell-off in the altcoin industry. It has now plunged by over 11% from its highest level this year.
Altcoins like ICP and Quant have crashed
Internet Computer (ICP) continued its sell-off, reaching a low of $7.62, its lowest swing since December last year. It has crashed by more than 61% from its highest level this year.
Dogecoin, the popular meme coin was also deeply in the red as it crashed to $0.1143, 47% below its highest point this year. Quant (QNT) and Hedera Hashgraph have also slumped by double-digits from their highest levels this year.
It was unclear why this sell-off gained momentum. A likely reason is that this crash happened after Bitcoin formed a small double-top pattern at $72,000. In most cases, this pattern is usually followed by a sell-off. Most altcoins tend to move in lock-step with the price of Bitcoin.
Also, Bitcoin ETFs have not seen substantial inflows in the past few days. Data shows that the iShares Bitcoin ETF (IBIT) added 23 coins on Monday, bringing the total holdings to 305,592.
Other ETFs like the FBTC, ARKB, BITB, and BTCO had substantial outflows on Monday. All ETFs lost over 3,169 coins valued at $208 million.
Hawkish Federal Reserve
Cryptocurrencies have also slumped because of the actions by the Federal Reserve. In its meeting last week, the bank decided to leave interest rates unchanged between 5.25% and 5.50% and hinted that it will deliver just one cut this year.
In a statement on Monday, Patrick Harker, a Fed official said he expected one rate cut in December or no cut at all. He insisted that the Fed will only cut when it confirms that inflation is moving towards the 2% target. Other Fed officials like Jerome Powell and Raphael Bostic have shared the same views.
Bitcoin and other altcoins have slumped as American investors rotate back to stocks, which are firing on all cylinders. The S&P 500 and Nasdaq 100 indices have all surged to their highest levels on record this week.
Analysts are optimistic that the surge will continue. As I wrote on Monday, analysts at Goldman Sachs, Jefferies, and BMO have recently boosted their S&P 500 forecast.
Meanwhile, these coins have slumped as Bitcoin supply rises gradually. Recent data shows that some mining companies have sold Bitcoins that has existed in their balance sheet for a while, which is a sign of capitulation.
Still, this sell-off is part of a process that has been forming in the past few months. Bitcoin has remained between the support at $56,000 and $73,500 in this period. As such, more sustained sell-off will be confirmed if Bitcoin slumps below $56,000.
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