Profit-Taking Leads to Bitcoin Decline
Bitcoin (BTC) and several major cryptocurrencies experienced a notable downturn, losing over 3% as profit-taking set in during the early hours of Friday in Asia. This drop aligns with market expectations following a recent rally.
The overall cryptocurrency market capitalization witnessed a decline of 3.2% in the last 24 hours. BTC fell from $86,000 to just below $84,000, while Ethereum (ETH) dipped below the $2,000 mark. Additionally, Solana’s SOL token experienced a 5% decrease.
Mixed Performance Among Major Tokens
In the midst of this downturn, XRP continued its steady decline, retreating from Wednesday’s 10% spike to a weekly gain of just 4.8%. Conversely, BNB Chain’s BNB token has shown resilience, with weekly gains exceeding 8%.
At the time of reporting, Tron’s TRX and TON were the only significant tokens showing positive movement, each rising by 2%. Notably, TRX was launched on the Solana network for the first time on Thursday, aiming to broaden its user base. Meanwhile, TON has garnered retail interest following the Toncoin Foundation’s announcement that venture capital firms now hold over $400 million in assets after recent investments.
FOMC Meeting’s Impact on Market Sentiment
The Federal Open Market Committee (FOMC) meeting on Wednesday provided a temporary boost to the markets, allowing BTC to soar past $85,000 as no rate cuts were announced. However, the Fed’s decision to scale back its “quantitative tightening” program starting in April was interpreted by traders as an indirect signal of a rate cut, as noted by Singapore-based QCP Capital in a recent Telegram update.
Options markets have begun to adjust to this sentiment. Dr. Sean Dawson, head of research at the on-chain options platform derive.xyz, shared insights via email with CoinDesk. He reported, “The probability of BTC reaching above $100K by June 30 has surged from 20% to nearly 30% in the past 24 hours.”
Conversely, he noted that the likelihood of ETH maintaining a position above $2,000 by June 30 has now become a coin toss, dropping from 40% to 50%. Interestingly, nearly 60% of ETH options traded on Derive.xyz in the last 24 hours were calls, indicating a bullish market sentiment. For Bitcoin, 34% of the trading volume consisted of purchases reflecting a demand for downside protection.
Market Watch: Key Levels to Consider
FxPro’s analyst Alex Kuptsikevich pointed out that the $80,000 support level is a critical point to monitor for potential breakdowns. He adopted a cautious stance, stating, “The crypto market has yet to surpass its 200-day moving average, which hovers around $2.9 trillion. A significant rally above this threshold could ignite an active buying phase, though there remains a risk of bears setting a trap, as they have done in the past.”
He emphasized the importance of Bitcoin maintaining momentum by staying above this significant level. Should it succeed, it could reignite interest in purchasing a variety of altcoins and memecoins that have been in a correction phase for some time.
