Crypto Market Update

Crypto majors slid as much as 14% in the past 24 hours as a Monday sell-off extended into Tuesday amid generally bearish sentiment and the lack of actionable catalysts to support the market.

Solana’s SOL fell 14%—bringing 7-day losses to over 20%—while Dogecoin (DOGE), XRP (XRP), and Ether (ETH) fell more than 8%. Bitcoin lost the $92,000 level for the first time since late November, threatening a potential downside break of the multi-week consolidation between $90,000 and $110,000.

Overall market capitalization fell 6.6%, while the broad-based CoinDesk 20 (CD20), a liquid index tracking the largest tokens, dropped more than 7%.

Traders suggested the current bearish sentiment might be overblown and that macroeconomic decisions were crucial for market growth. Jeff Mei, COO at crypto exchange BTSE, stated, “Bitcoin, Ethereum, and Solana shouldn’t be trading this far below their all-time highs.” He pointed out that inflation concerns in the U.S. and a pause in Fed rate cuts kept markets down, but weak economic data released last week could prompt Fed officials to take further action.

Augustine Fan, head of insights at SignalPlus, echoed this sentiment, saying, “The ‘slowdown’ narrative will likely dominate the discussion in the near term, with stocks and bonds trading back in positive tandem.” He explained that the “bad data is now good” as markets refocus on Fed eases, benefitting both gold and BTC in the near future.

Data released earlier this month showed that the widely-watched Consumer Price Index (CPI) surged 0.5% month-over-month in January, far exceeding the expected 0.3% gain. This has led investors to favor cash positions or risk-off bets until clearer signs of government intervention to boost the economy emerge.

The U.S. CPI measures the average change over time in prices paid by urban consumers for a market basket of goods and services, and changes in CPI readings tend to impact Bitcoin and the broader crypto market, as investors often see it as a hedge against inflation.