Friday, September 22, 2023

What caused the cryptocurrency crash?

Key facts:
  • Bankrupt exchange FTX is expected to sell at least $3.4 billion in altcoins.
  • “Ethereum will not be ultrasonic money,” the company said.

Minutes before the general fall shown in the cryptocurrency market today, Matrixport, a company that offers investment in crypto assets, warns why crash (fall) for altcoins.

In a report on the matter, the company noted that Creditors of bankruptcy exchange FTX may begin selling $685 million in Solana (SUN) starting this week. In addition, he added that these people are expected to sell at least USD 3.4 billion in cryptocurrencies that they will receive as payment, as reported by CriptoNoticias.

This selling pressure “should pose a threat to altcoins for the rest of the year” pushing them lower, the company said. In front of this scenario, last week, the price of SOL fell more than 10%, lost the support of USD 19, which is considered “worried”.

In addition to this, the company commented on that future ApeCoin (APE) open to stakingscheduled for September 16-17, will allow users to sell USD 50 million of tokens. In anticipation of that, the price of the currency fell by 13% last week.

Amidst these expected events, the two leading currencies in the market have seen sharp declines today. The price of bitcoin (BTC) fell to its 3-month low near $25,000, while ether (ETH) fell to its lowest level in 6 months at $1,500.

According to Matrixport, Ethereum’s loss of the “psychologically important level” of $1,600 “will lower prices, especially if earnings growth fails.” In addition, he emphasized that it is “negative” for the market that its performance is worse than that of bitcoin.

He technically maintained that A drop in ETH from $1,500 could bring back the idea that it will fall to the psychological level of $1,000. Because of this, he clarified that they are currently “very cautious.”

Because of this, he summarized that “Ethereum will not be an ultrasonic currency” as defended by its enthusiasts. This term refers to the deflation that ETH has from Merge due to its burning of tokens, giving the scarce value of the asset due to its reduced supply. However, it should be taken into account that, with more activity, there are more tokens burned, so it is expected that in the next bull run the burning will increase and, thus, the deflation will increase.

Meanwhile, the prices of bitcoin and ether continue to fall from the 50-day moving averages located at 27,700 and USD 1,700. This “is” and is fueled by a decline of around 35% in weekly trading volumes, the company said. “This low liquidity will be prone to downside risk in prices,” he explained.

The analyst warns that a “terrible time” is coming for altcoins

Matrixport’s bearish projection joins other specialists such as the analyst known as Nacho IC. “In the short term we will have a terrible time for altcoins, that is, for currencies that are not bitcoin,” he said today after seeing how some began to “bleed” in the falls.

Nacho IC explained that this particularly pressured by liquidations expected from FTX’s creditors. “This is causing panic” in the world of cryptocurrencies, he said.

In addition, as other analysts said, Nacho IC emphasized that the interest rate decision of the United States Federal Reserve (Fed) is approaching. And they are expected to remain high because inflation has increased slightly in the past month, which discourages investment in the markets, especially in higher risks such as altcoins.

With this economic situation, “imagine how much altcoins could fall in the face of a recession next year or this year,” the analyst exclaimed. Therefore, in his opinion, this is not the time to accumulate this type of assets to make a profit in the short term.

As for bitcoin, if it continues to fall, some analysts maintain that it may stop at USD 20,000, where it has a strong level of support-resistance at the beginning of the year, and then start a strong streak approaching the middle. and the possible approval of the first currency spot investment funds (ETF) in the United States.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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