Crypto market capitalization dropped 7%, with major tokens like bitcoin, ether, and others falling sharply in the past 24 hours.
The decline was triggered by higher-than-expected inflation data and profit-taking by some traders, with some analysts predicting further losses before a potential rebound.
Crypto market capitalization dropped 7%, its sharpest fall this year, as bitcoin (BTC) plunged 8% in the past 24 hours to wipe weekly gains and kickstart a marketwide decline.
Bitcoin slumped from Thursday’s high of $73,000 to as low as $65,800 early Friday before slightly recovering. Meanwhile, Coindesk 20, a broad-based index of most liquid cryptocurrencies, was down 8.25%.
Ether (ETH), Cardano’s ADA, BNB Chain’s BNB and XRP showed similar losses, while volatile meme coins dogecoin (DOGE) and shiba inu (SHIB) fell 13%. Solana’s SOL tokens were the only major token in green, up 1% since Thursday.
The sell-off started during the U.S. trading hours on Thursday as the February Producer Price Index (PPI) came in 0.6% higher, doubling the pace in January and doubling economist forecasts, dousing hopes for a rate cut in May.
Data shows that crypto-tracked futures suffered over $800 million losses, the second-largest figure this year. Longs, or bets on higher prices, suffered $660 million in liquidations, likely contributing to the sharp downturn. Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin.
Meanwhile, some traders warned of further losses in the coming weeks before an eventual price rebound.
“New historical highs are a trigger for selling,” shared Alex Kuptsikevich, FxPro senior market analyst, in an email to CoinDesk. “Some players are taking profits, which raises the question of whether there will be enough hot buyers at current levels or whether the majority will prefer to wait for a deeper correction.”
“In a corrective scenario, the $65.0-65.5K and $60.0-60.5K areas are of particular interest, as they contain important round levels (significant for retail) and the 76.4% and 61.8% Fibonacci retracement lines,” Kuptsikevich added.
Fibonacci retracements are a technical tool to predict potential price support and resistance.
