Why did crypto collapse and will it recover? – Blockchain news, opinion, TV and jobs

The cryptocurrency market has been volatile throughout 2024, and has seen a major shakeout. In addition, Bitcoin surpassed $100,000 in December Only to go down. This article looks at why cryptocurrencies crashed and will they recover?

Despite numerous buy orders, Bitcoin fell below $99,000 on December 19 after the Federal Reserve cut interest rates. However, the interest rate cut was not the only factor. This has dampened investor sentiment. This happened because Federal Reserve Chairman Jerome Powell appeared to be moderating future interest rate cuts. However, this short decline did not last. Bitcoin quickly rebounded and crossed $100,000.

Altcoins mimicked Bitcoin’s new volatility as it fell below key support levels and then rose strongly. There were questions about why the market moved this way. Here’s a brief overview of the most important headlines of the past 24 hours.

• Europe is First to see Bitwise’s new Solana product, which delivers a 6.48% annual yield (APY) with a 0.85% fee. So, is this necessary, considering that a lot of staking options already exist?
• Following crypto proponents Forbidden After Carolyn Crenshaw was renominated to the SEC, they amassed 100,000 fans. Could this indicate the political potency of the cryptocurrency world in the future?
• After the Fed rate cut, Bitcoin’s drop to $99,000 raised questions about why it fell so quickly.
• The Bitcoin Mini Trust ETF has $4 billion in assets and a fee of 0.15%, which is the best in its category. The product is now being noticed, and we are seeing a huge change in market sentiment.
• As Arthur Hayes CountriesTrump’s inauguration day could see a decline in the cryptocurrency market, raising questions about why he expects such a sell-off.

Why did crypto collapse and will it recover?

Bitcoin decreased Below $100,000 this week as the cryptocurrency market took a major hit. This shift is reflected in the Cryptocurrency Fear and Greed Index, which fell from an “extreme greed” reading of 88 to 69. This sudden change has left many investors concerned about the market. The most well-known reason for this decline is a serious concern.

On December 19, Bitcoin was trading at around $102,300, and Ethereum fell to $3,600. Tokens such as Cosmos, Floki, THORChain, Curve DAO Token, Fantom and dozens of others fell among the biggest losers.

The recent monetary policy decision by the Federal Reserve was a major factor in the market decline. On December 18, the Federal Reserve cut interest rates by 0.25%, for a total of 1% this year. Although this was expected, the Fed’s forward guidance hurt the markets. Officials said they expect two additional interest rate cuts in 2025, and continued to call for a tough stance on controlling inflation. Expectations indicate that inflation may reach the 2% target only by 2026 or 2027.

The Federal Reserve’s hawkish tone has reverberated throughout financial markets. The Dow Jones and Nasdaq 100 indexes fell more than 2% in US stocks. The 10-year bond yield reached 4.557%, and the 30-year bond yield rose to 4.7%, both hitting multi-month highs. The US dollar index rose to its highest level in two years, putting pressure on risky assets such as cryptocurrency funds.

Following Wyckoff’s method, the cryptocurrency market decreased Due to profit taking, panic selling, and mean reversion. Investors often sell into gains after rallies, causing a pullback. This is associated with reversion, where assets return to their averages after a rise. For example, if Solana’s price weakens and remains 20% above its 200-day average, it could face further declines. However, the future remains uncertain.

The Wyckoff method describes four stages in the life of an asset: markup, distribution, accumulation, and reduction. Recently, the prices of cryptocurrencies have been rising. A decline may indicate a shift to markdown or signal the end of a distribution phase.

Analysis of Bitcoin’s stability amid the less volatile cycle of 2024

Bitcoin’s “least volatile cycle in history” was 2024. Federal Reserve Chairman Jerome Powell’s dovish comments to the market further impacted the metal. Powell said the Fed is likely to cut interest rates by 50 basis points in 2025 instead of the four previously expected, and 1972 remains the earliest that economists at Bank of America see the Fed finally returning to a neutral policy stance. The announcement dampened optimism among investors and created concerns about sharp declines in risky assets such as cryptocurrencies.

However, according to on-chain analytics provided by GlassnodeBitcoin’s development path is more measured. As Bitcoin’s market capitalization grows, historically, the severity of drawdown periods during bull cycles has decreased. This cycle saw Bitcoin’s decline fall at 32%, lower than the cycle’s decline of 63% in 2021, 36% in 2017, 71% in 2013, and 49% in 2011.

Bitcoin rebounded from its all-time high of $108,366 on December 19, falling to $98,744. Based on the distribution based on the cost of Bitcoin, Raphael Schulz-Kraft, founder of Glassnode, said, Found A specific price range, from $99,000 to $97,000, is a major support area. This metric measures where the largest supply of Bitcoin has been bought and sold across different price levels.

Technically, Bitcoin has a strong uptrend Market structure on medium and long-term charts. By examining on-chain support levels along with broader market analysis, this critical zone between $97,500 and $95,500 has been identified.

Historical trends in cryptocurrency market volatility

Volatility defines the cryptocurrency market. Why does the encryption crash and will it recover? Prices can fluctuate dramatically, even in hours. For example, Bitcoin often rises and then corrects sharply. Likewise, altcoins can rise or fall just as quickly. This uncertainty both intrigues and scares investors.

Hack Mount Gox 2011: In June 2011, after a security breach at Mt.Gox, the largest Bitcoin exchange, the price of Bitcoin rose. decreased From $32 to $0.01. This event raised concerns about the security of cryptocurrency exchanges. In February 2013, Bitcoin rebounded and new highs were reached.

Bear market 2013-2015: In December 2013, before Bitcoin reached an all-time high of approximately $1,151, its value fell by more than 80% as China cracked down on counterfeit currencies and Mount Jukes collapsed. Bitcoin did not see real market progress until late 2015 when it began to slowly recover.

The boom of 2017 and the collapse of 2018: Bitcoin enjoyed a ride above $20,000 in December 2017 as investors and media became interested. However, by December 2018, it had collapsed by almost 80% to below $3,200, the largest cryptocurrency curve in history.

2020-2021 rise and subsequent decline: 2021 Bitcoin reached a new all-time high of over $64,000 in April, as institutions joined the party and the economy was stimulated. Then, there was a sharp decline to nearly $31,000 in May due to regulatory concerns and environmental blame for Bitcoin mining. Later in the year, the market partially recovered and saw Bitcoin rise to around $67,000 in November.

Market decline in 2022: The bankruptcy of FTT’s Terra-Luna and FTX were two major setbacks faced by many in the cryptocurrency market in 2022, with investors suffering losses. The price of Bitcoin fell below $20,000 during this period due to the broader market collapse.

Al Nahda 2024: Factors such as increasing institutional investment in Bitcoin, political developments that favor cryptocurrencies, and the approval of spot Bitcoin ETFs have all combined to bring Bitcoin to $100,000 by December 2024. This shows the popularity of the digital asset in the market and is a measure of its strength and growth.

It is easy to see that Cryptocurrency market It was the boom and bust and how quickly it recovered, and sometimes better than before.

Will the cryptocurrency market recover?

Over the past month or so, Bitcoin trends have sent cryptocurrency prices soaring, and there is a hint of an imminent recovery. Why does the encryption crash and will it recover? In the near term, Bitcoin will reach $124,000. A rebound like this could also help calm other altcoins and entice investors to buy at a lower price when prices fall.

But caution is advised, as the first recovery after a decline can lead to a “dead bounce”. In this phenomenon, the asset declines sharply but recovers, only to fall again shortly after.