crypto prices plummeted in the past few hours following the close of US markets on Tuesday, with bitcoin (BTC) dropping by 6%, ethereum (ETH) by 9%, and Solana (SOL) by 7% within a 24-hour period according to CoinMarketCap.
The sudden market sell-off began shortly after 5 pm Eastern time, leading to bitcoin plunging from nearly $62,000 to around $58,000 before rebounding to the $59,000 level.
Similarly, ETH saw a decline from the upper $2,500s to the mid-$2,400s, while SOL fell from above $154 to its current level near $147.
According to CoinGlass, leveraged futures positions worth $205 million were liquidated in the last 4 hours, contributing to total liquidations exceeding $300 million within the past 24 hours, marking the highest level since August 4th.
Technicals Spark the Abrupt Cryptocurrency Price Plunge
While there was no specific catalyst identified for the sharp drop in crypto prices, technical factors may have influenced the decline, particularly for bitcoin.
bitcoin's sudden dip occurred as the cryptocurrency's price fell below its 50-day moving average (50DMA), a significant level of resistance throughout August that briefly turned into support during last Friday's crypto rally, which saw BTC climb to $65,000.
However, this support has now vanished along with an uptrend from mid-month lows, suggesting a potential near-term test of $56,000 based on chart analysis.
What Lies Ahead for crypto Prices?
The recent significant downturn in crypto prices could prove short-lived if Wednesday's Nvidia earnings report surpasses expectations.
Nvidia, a major supplier of AI technology, holds a pivotal role in the AI sector's performance. Positive earnings results from Nvidia, one of the world's largest companies, have historically influenced the US stock market and, consequently, the cryptocurrency space.
Hence, strong Nvidia earnings could serve as a catalyst for major cryptocurrencies, potentially driving a swift recovery for bitcoin from below $60,000.
Furthermore, upcoming US core PCE inflation data scheduled for later in the week may further bolster market sentiment, potentially indicating a series of rate cuts by the Federal Reserve in the coming quarters.
This dovish shift in the Fed's language and guidance, alongside easing liquidity conditions, are expected to provide substantial support to crypto prices in the foreseeable future.
