Why Is The Crypto Market Down Today? (2024)

The cryptocurrency market experienced a downturn recently, with the total market capitalization dropping by approximately 7.68% to $2.27 trillion on the previous day. Bitcoin, the largest cryptocurrency, is currently trading at $67,279, 7.69% down over the past seven days but reflecting 4.98% increase in the last 24 hours. Ethereum, the second-largest cryptocurrency, is trading at $3,527, down by 10.25% in the last seven days.

The cryptocurrency market capitalization decreased from $2.73 trillion to $2.53 trillion over the past seven days, while the 24-hour trading volume stands at $148.02 billion. The month has been marked by significant price fluctuations in cryptocurrencies, notably with Bitcoin reaching a new all-time high of $73,750 before subsequently dropping to the $62,000 level within a matter of weeks. It remains uncertain whether the second half of the month will bring slower growth or if cryptocurrencies will once again reach new all-time highs.

How is the Crypto Market Performing?

The cryptocurrency market is exhibiting significant volatility, with prices fluctuating unpredictably. Currently, there is a downturn after Bitcoin surpassed its all-time high multiple times this month. As of the latest update, the Fear and Greed index stands at 82.34, indicating a state of extreme greed.

The decline in crypto market capitalization coincides with the largest single-day outflow ever observed from Spot Bitcoin ETFs. Bitmex research reports that the Grayscale Bitcoin ETF experienced its most substantial outflows, amounting to $642.5 million, on March 18, 2024. Meanwhile, Fidelity’s Bitcoin ETF saw its lowest inflow at $5.9 million. Consequently, Spot Bitcoin ETFs experienced a net outflow of $154.3 million. The decrease in the flow of capital into Bitcoin ETFs happened in anticipation of the Federal Open Market Committee meeting scheduled yesterday.

On Wednesday, the Federal Reserve kept interest rates steady as anticipated but signaled its plan to enact several rate cuts before the year ends. Following its two-day policy meeting, the Federal Open Market Committee (FOMC) announced its decision to maintain the benchmark overnight borrowing rate within the range of 5.25% to 5.5%, which has remained unchanged since July 2023. Alongside this announcement, Fed officials forecasted three quarter-point rate cuts by the end of the year, representing the first reductions since the start of the Covid pandemic in March 2020.

The downturn is part of a broader correction that started on March 14, coinciding with a local peak around $2.72 trillion. Firstly, bearish divergence signals appeared prior to the correction, evident in the market’s rising capitalization alongside a declining daily Relative Strength Index (RSI), suggesting weakening underlying strength in price growth. Secondly, the market’s daily RSI reached excessively elevated levels before the correction, signaling overvaluation and prompting reduced trader demand due to perceived inflated prices.

The significant decline in the prices of major cryptocurrencies has triggered numerous liquidations in the derivatives market, surprising bullish traders and resulting in a wave of long position liquidations. According to Coinglass data, the crypto market has seen over $161.52 million in positions liquidated with long positions accounting for around $70 million of the total in the last 24 hours.

The liquidation of long derivative positions can exert downward pressure on asset prices, particularly in the absence of sufficient buying momentum indicated by trading volumes.

As of March 21, 2024, BTC is trading at $67,261 around 8.95% low from it’s all-time high and ETH at $3,544 that’s around 27.61% low from it’s all time-high.

Nevertheless, the market sentiments turned from extreme greed- greed-extreme greed. This is the nature of the crypto market which is highly volatile and unpredictable. The current volume in the digital crypto market stands at $147.82 billion.

The crypto market till now has no doubt positively responded to the global finance uncertainty and is still standing strong amid tightening credit situations with shaky bond market volatility. Crypto cannot sail alone, for a balanced atmosphere all other financial assets have to follow the same sentiments.

Is Investing in Cryptocurrency Safe?

The cryptocurrency market has seen the good side as well as the worst side of the market, be it post-Russia-Ukraine effects, Terra-Luna crash, FTX collapse or tightened tax regulation, it has witnessed roughest storms during the past few years.

The year 2023 gave a fresh start to the crypto world, showing positive signs of recovery. Crypto investors believe that in situations like this, investing in stable digital currencies like Bitcoin and Ethereum in SIP format is a safe choice. Crypto experts consider that in the overall portfolio, investors should just look at investing just the 5% exposure to cryptocurrencies. The most important part is to invest only a miniscule amount and not all your life savings as the market is highly volatile and there are chances of you losing it all.

Steps On How To Invest In Indian Cryptocurrency Market

Step 1: Select a cryptocurrency: Choose a cryptocurrency you wish to invest in. Like any other asset class, crypto has its own fundamentals and different blockchain networks back them, intrinsic value and mining techniques. Make sure that you research and analyze before investing as the crypto market is highly volatile.

Step 2: Select a crypto exchange: After you made up your mind about a cryptocurrency it’s time for you to find a perfect crypto exchange platform for yourself. It is a necessity to have a functional account in a crypto exchange which will help you to buy and sell cryptocurrencies. Check out our article on the best cryptocurrency exchanges in India.

Step 3: KYC: Once you select a crypto exchange you need to register yourself by providing personal details like name and address and complete the entire KYC formalities. After setting up your account you’re ready to invest in cryptocurrency.

Step 4: Choose payment mode: For buying a cryptocurrency you need to select a payment option that you find comfortable. You can choose peer-to-peer, bank transfer, online payment mode or a crypto wallet.

Step 5: Purchase cryptocurrency: After adding the funds to your account you can smoothly buy your selected cryptocurrency. All you have to do is press on the “buy” tab and you can easily buy the cryptocurrency of your choice.

Step 6: Storage: After you purchase the crypto coins, don’t forget to store your currencies securely because they are not regulated and you must keep them safe as there’s always a risk of hacking or theft. You can check out the crypto storage options from here.

Step 7: Selling cryptocurrency: This is as important as buying as this helps you make money out of investing. You can sell the cryptocurrency the same way you purchased it, just click on the tab “sell” in your portfolio. You can fully or partially sell your crypto investment based on your choice but don’t forget to timely book your profits.

Bottom Line

It is a wise choice to observe the crypto market prudently with the uncertain environment and slow recovery of macroeconomic situations in the world. Do not make any reckless decisions as it is a good time to observe the market closely and analyze it.

One may never know, but the observation will eventually help the investors to make smart decisions and might have a favorite digital asset at a fair value, once the chaos situation fizzes out completely.