Here’s why Bitcoin, Ethereum, and Dogecoin prices collapsed

Cryptographic analyzer Ali Martinez Provide some insight into why Bitcoin, Ethereum, and Dogecoin prices collapsed. The cryptocurrency market has seen a decline over the past few days after starting the year on a high.

Why are the prices of Bitcoin, Ethereum, and Dogecoin collapsing?

in Share XMartinez revealed why Bitcoin, Ethereum, and Dogecoin prices collapsed. It was stated that capital flows to Crypto market It decreased over the past month, falling from $134 billion to $58 billion. The cryptocurrency analyst added that this indicates a significant decline in investment activity.

Simply put, there was a lack of liquidity in the cryptocurrency market, causing the prices of Bitcoin, Ethereum, and Dogecoin to collapse. Bitcoin led this downtrend, falling as low as $92,000 afterward Prices rebound above $100,000 At the beginning of the year. Due to the strong price correlation with the major cryptocurrency, Ethereum and Dogecoin followed suit and suffered a similar downtrend.

The lack of inflows into the cryptocurrency market is likely due to bearish sentiment among investors caused by developments on the macro side. Recent strong jobs data in the US has dampened hopes for an imminent one Federal interest rate cut. Instead, traders are now anticipating that there will only be one rate cut this year, most likely in October.

This represents a bearish outlook for Bitcoin, Ethereum, and Dogecoin prices because investors are less likely to invest in these risky assets in the absence of these quantitative easing policies.

Interest rate cuts usually increase liquidity, giving investors the confidence to invest in risky assets like cryptocurrencies. For context, there were three interest rate cuts by the Fed last year, which provided a big boost to the cryptocurrency market as well. Bitcoin rose above $100,000 For the first time in its history.

Other Onchain metrics also highlight bearish sentiment

There are other on-chain metrics that highlight the downtrend in the cryptocurrency market and explain why the prices of Bitcoin, Ethereum, and Dogecoin are collapsing. In another X post, Martinez revealed that No Large transactions BTC on the network increased by 51.64% over the past month, falling from 33,450 to 16,180. The cryptocurrency analyst added that this may indicate a significant decline in whale activity.

A decline in whale activity is bearish for Bitcoin, considering how this class of investors puts the flagship cryptocurrency in price discovery when it accumulates. As such, Bitcoin is bound to collapse, with these whales choosing to remain on the sidelines until market conditions improve.

Meanwhile, Martinez revealed that Bitcoin Network activity It fell to its lowest level since November, with just 667,100 active addresses. This once again highlights the current bearish sentiment among investors.

Featured image created with Dall.E, chart from Tradingview.com