Many crypto assets have faced volatility issues recently, resulting in red dominating the heat map of the cryptocurrency market. This did not happen for the first time, as with the beginning of the second quarter of 2024, the cryptocurrency market is experiencing significant price fluctuations and volatility issues.
It clearly shows today's market decline as cryptocurrencies are falling. Many will be terrified of a market collapse and may end up selling their cryptocurrencies, initiating a selling pressure.
In this blog, let's discuss why the cryptocurrency market is down today.
Crypto market overview
The global cryptocurrency market cap is $2.53 trillion and has faced a 4.38% decline in the last 24 hours. Trading volume also decreased to $96.15 billion.
Although there is no significant price decline in the case of Bitcoin and Ethereum, cryptocurrencies like Dogwifhat, Wormhole and a few other coins have declined significantly. Speaking of memes, the overall market cap is down 6.39%, while trading volume is trying to come back.
Read also: Ripple CEO Brad Garlinghouse's cryptocurrency predictions for 2024
Earlier, the Solana network was popular and dominated the cryptocurrency market. Now, the Solana ecosystem has faced a 3.37% drop in market cap. This overall decline in the cryptocurrency market also affected stablecoins, with the market capitalization falling by 0.14%.
Compared to the rest of the cryptocurrencies, AI-based altcoins have declined the most. The market capitalization of AI ecosystems decreased by 6.48% and trading volume decreased by 7.78%.
Why is the cryptocurrency market declining today?
Market fluctuations often cause prices to fall, causing the cryptocurrency market to crash. Reasons such as market sentiment and entering the correction zone have been linked to this fall.
Market sentiment
The Fear and Greed index data has shifted from yesterday's score of 79 to 75, a shift from almost greed territory to fair greed territory. It shows an increase in selling pressure in the cryptocurrency market as investors sell their cryptocurrencies instead of buying or holding them.
Although the current shift in sentiment is not that huge, compared to March data, the market is slow.
Encryption filtering
According to Coinglass data, about 99,403 cryptocurrency traders fell victim to liquidity overflow in the past 24 hours. The total liquidation data contains $274.74 million, and Bybit alone is responsible for liquidations amounting to $8.38 million.
Bitcoin, Ethereum, and Solana are the cryptocurrencies most affected by this liquidation.
Market correction before the halving
The Bitcoin halving will only take a few days, and mining rewards will be halved after that. This will help maintain Bitcoin scarcity as production will decrease, but this will affect miners.
Read also: 2 Altcoins to Sell Pre-Bitcoin Halving
Analysts confirmed a correction in Bitcoin before the halving events, which are happening now. This correction may last for a few days before entering a pre-halving price rally, followed in the longer term after the halving.
Although the effects of this are better, analysts believe that miners will move to another proof-of-work network after the halving.
Final thoughts
Factors such as market sentiment and liquidation play a huge role in the performance of the cryptocurrency market. Currently, the cryptocurrency market is down, and some cryptocurrencies have suffered, losing days of gains. However, there is a possibility of recovery within the next few days.
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