Dogecoin, Ether Slump 9% Amid Bitcoin Tumble
In a tumultuous 24-hour period, major cryptocurrencies including Dogecoin (DOGE) and ether (ETH) plummeted by 9%, closely following bitcoin (BTC), which faced a significant decline of 4.5%, dropping below the $80,000 mark. This downturn triggered a massive liquidation of long positions, erasing around $700 million from the market, with losses primarily hitting leveraged traders. Specifically, approximately $420 million in bitcoin longs and $150 million in ether longs were wiped out, along with $30 million in Dogecoin long positions. Other notable cryptocurrencies also suffered: Solana (SOL) fell by 8%, and XRP was down 7%, contributing to a broader decline of over 6.5% across the CoinDesk 20 index.
The open interest in BTC futures experienced a notable reduction of 7%, falling to $45 billion, indicative of forced exits due to margin calls impacting riskier investments. Nick Ruck, a director at LVRG Research, highlighted a shift in investor sentiment towards a more risk-averse approach. “The chances for a Federal Reserve interest rate cut diminished after a stable jobs report and anticipation that February’s CPI report will align closely with January’s reading,” he commented via Telegram. Ruck further noted that traders are likely to remain on the sidelines, adjusting their risk exposure until the U.S. economic landscape clarifies.
The broader investment climate continues to weaken, as evidenced by the S&P 500’s 2% decline and a 3% fall in the Nasdaq at the week’s onset. A resurgence of fears surrounding U.S. trade tariffs set to take effect next month and worries about a potential recession following former President Donald Trump’s recent remarks exacerbated market anxieties. This drop marks the steepest decline in U.S. equity markets since September 2022, with the so-called ‘Magnificent 7’ tech stocks losing a staggering $830 billion in market capitalization.
Adding to the pessimistic outlook, a stronger U.S. dollar and hawkish signals from the Federal Reserve regarding interest rate policies, specifically the inclination for fewer rate cuts in 2025, weigh heavily on market recovery prospects. Investors have increasingly turned to safe-haven assets such as gold and the Japanese yen, indicative of a broader caution within the market.
Despite the bearish climate, some contrarian indicators provide glimmers of potential relief for those holding bullish positions. The Crypto Fear & Greed Index currently sits at 15, categorized in the “extreme fear” range, which historically may foreshadow potential market recoveries. Analysts at Singapore-based QCP Capital suggest that monitoring U.S. Treasury yields and the strength of the dollar could offer important insights into future market positions.
In an optimistic note amid the turmoil, QCP observed that while sentiment appears overwhelmingly negative, the drop in 10-year Treasury yields—by around 60 basis points—along with the weakening U.S. dollar could serve as historically positive signals for USD-denominated assets, including cryptocurrencies and U.S. equities. This shift may ease borrowing costs for the U.S. government, particularly crucial as plans for potential tax cuts and a more expansive fiscal policy take shape under Trump’s influence.
