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The cryptocurrency market began the week with a notable downturn, as total sector capitalization dipped toward $3.8 trillion. Bitcoin (BTC), the leading cryptocurrency, experienced a significant correction, trading as low as $112,700.
CoinGecko data shows that this decline had a ripple effect, causing major altcoins such as Ethereum (ETH), XRP, Solana (SOL), and Dogecoin (DOGE) to register losses of 7%, 5%, 7%, and 10%, respectively.
S&P 500 Rises While Crypto Market Slumps
The selloff also impacted crypto-related stocks. Bitcoin investment firm Strategy (MSTR) saw a decline of 2.6%, while US-based crypto asset exchange Coinbase fell by 3.4% during afternoon trading. In contrast, the benchmark S&P 500 index managed to gain 0.4%, positioning itself for another potential all-time high.
Analysts suggest that the recent market slump can be attributed to a buildup of excess leverage following last Thursday’s Federal Reserve (Fed) decision to cut interest rates.
Adam Morgan McCarthy, head of research at Kaiko, indicated that funding rates have risen since the Fed meeting, pointing to speculative trading that may have occurred in the wake of the rate cut.
He noted that the combination of excess leverage from speculative bets and an earlier price decline triggered a wave of liquidations, further exacerbating the market downturn.
Deutsche Bank Predicts Bitcoin Recovery
The Fed’s decision to lower borrowing costs by a quarter point marked its first rate cut of 2025. However, as Barron’s reported on Monday, Chair Jerome Powell characterized this move as a “risk-management cut,” implying a cautious approach rather than a wholesale easing of monetary policy.
Despite the immediate challenges facing the cryptocurrency market, the longer-term outlook appears optimistic. Deutsche Bank strategist Marion Laboure expressed confidence in Bitcoin’s recovery, predicting it could surpass $120,000 by the end of 2025.
Featured image from DALL-E, chart from TradingView.com
Ronaldo is an experienced crypto enthusiast dedicated to the nascent and ever-evolving industry. With over five years of extensive research and unwavering dedication, he has cultivated a profound interest in the world of cryptocurrencies.
Ronaldo’s journey began with a spark of curiosity, which soon transformed into a deep passion for understanding the intricacies of this groundbreaking technology.
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Ronaldo’s commitment to his craft goes beyond personal gain. He is passionate about sharing his knowledge and insights with others, empowering them to make well-informed decisions in the crypto space. Ronaldo’s writing is a testament to his dedication, providing readers with meaningful analysis and up-to-date news. He strives to offer a comprehensive understanding of the crypto industry, helping readers navigate its complexities and seize opportunities.
Outside of the crypto realm, Ronaldo enjoys indulging in other passions. As an avid sports fan, he finds joy in watching exhilarating sporting events, witnessing the triumphs and challenges of athletes pushing their limits. Furthermore, His passion for languages extends beyond mere communication; he aspires to master German, French, Italian, and Portuguese, in addition to his native Spanish. Recognizing the value of linguistic proficiency, Ronaldo aims to enhance his work prospects, personal relationships, and overall growth.
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With a genuine desire to become the best version of himself, Ronaldo is committed to continuous improvement. He sets personal goals, embraces challenges, and seeks opportunities for growth and self-reflection. Ultimately, combining his passion for cryptocurrencies, dedication to learning, and commitment to personal development, Ronaldo aims to go hand-in-hand with the exciting new era that the emerging crypto technology is bringing to the world and societies.
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