The crypto market continued its crash last week, with the total valuation of all tokens plunging to $3.24 trillion from over $4.27 trillion a few weeks ago.
Summary
- The crypto market crash has accelerated in the past few months.
- Bitcoin and most altcoins have all moved to a bear market this year.
- A recovery will depend on the upcoming Nvidia earnings and the FOMC minutes.
Ethereum (ETH) and Bitcoin (BTC) prices have dropped in the last three consecutive weeks, and are now in their lowest level in months. The crypto market cap has also plunged in the last three straight weeks.
Why the crypto market has crashed
There are a few core reasons why the crypto market crash has accelerated in the past few weeks. One main reason is that the Crypto Fear and Greed Index has dropped to the fear zone of 22. It is common for the crypto industry to retreat when there is a sense of fear in the market.
The crypto industry has also plunged as the odds of a Federal Reserve interest rate cuts in December slips. A Polymarket poll with over $100 million in assets has the odds of a cut at 51%, much lower than the year-to-date high of 90%.
Cryptocurrency prices are also plunging as investors remain in the sidelines. Data compiled by Nansen shows that the stablecoin inflow in exchanges has pulled back in the past few weeks. These stablecoins now stand at $87 billion, down from $89.2 billion on November 10.
The crypto market crash has also happened because of the fear of liquidations. This fear has led to a strong decline in the futures open interest, which has led to weaker demand.
Will the cryptocurrency crash continue or rebound?
With the crypto market crash continuing, there is a question on whether it has more room to go or whether a rebound will happen.
The most likely driver for the crypto industry will be the upcoming Federal Reserve minutes of the last meeting. These minutes will come out on Wednesday. A dovish statement will be bullish for the crypto market.
The other potential catalyst will be the Nvidia earnings, which will also come out on Wednesday. Nvidia earnings will be important because it is the biggest company in the world. It is also the flagbearer of artificial intelligence, which has driven the stock market in the last three years.
Strong Nvidia earnings and guidance will mean that the AI bubble is not about to burst. Such numbers will boost the US stock market, and potentially, cryptocurrencies.
On the other hand, weak Nvidia results may trigger a bear market in the stock market, which will also negatively impact cryptocurrencies.
The other potential price action in the crypto market this week is a rebound, which may be part of a dead cat bounce. A clear crypto rebound will be confirmed when Bitcoin and most altcoins move above their 50-day and 200-day moving averages.
