Over the course of just six days, cryptocurrency markets have witnessed a staggering $230 billion reduction in market capitalization. This downturn coincides with Bitcoin's decline of 11.65% from its recent peak of $73,949 within the last five days. Notably, the AI sector of altcoins has seen the most significant impact, with a 41% loss in value over the past week.
Contributing Factors to the Recent Bull Market
Two key factors have been driving the ongoing bull market: the remarkable surge in Bitcoin following the ETF approval and the sudden surge of interest in the Solana ecosystem. However, recent developments suggest that the upward momentum is faltering, hinting at an impending correction.
Crypto's Recent Bullish Trend
Despite the immense popularity of Solana and meme coins, their performance is heavily reliant on Bitcoin's market movements. As long as BTC continued its upward trajectory, the altcoin markets experienced significant gains, particularly in the Artificial
Intelligence (AI) and meme coin categories.
As highlighted in previous reports, altcoins like Worldcoin (WLD) and Fetch.AI witnessed an impressive surge of approximately 500%. Similarly, meme coins such as dogwifhat (WIF) and Book of Memes (BOME) also saw substantial gains.
While ETF inflows have stabilized, Bitcoin's price appears to be slowing down after delivering 54% returns year-to-date. Since the beginning of 2023, the pioneering cryptocurrency has surged by 347%.
Reasons Behind the Crypto Market Downturn
On the weekly timeframe, Bitcoin's price has formed a bearish swing failure pattern (SFP), triggering caution among investors as BTC closed below its previous all-time high of $69,000. The diminishing momentum of BTC could be a key factor contributing to the current market downturn, prompting market participants to secure profits.
This temporary weakening of buying pressure has led to profit-taking activities, resulting in a decline in the total cryptocurrency market capitalization from $2.89 trillion to $2.66 trillion, according to CoinGecko data.
According to CoinGlass data, Bitcoin's price has experienced nearly a 10% drop in the last four days, leading to $400 million in total liquidations within the past 24 hours alone. During this period, BTC long traders saw positions worth $100 million liquidated, along with $71 million in Ethereum and $28 million in Solana.
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