Bitcoin: the largest and most influential cryptocurrency, slipped 2.8% in the past 24 hours, trading around $111,382, according to CoinDesk data. Ether (ETH) fell 2.9%, while XRP dropped 2.6%, both posting sharper declines than the broader stock market, where the S&P 500 slipped only 0.2%.
Why Did Cryptos Lose Their Momentum
The volatility came just after Powell’s speech at the Jackson Hole Economic Symposium, where he hinted that a rate cut may be on the horizon. Typically, lower interest rates boost the appeal of riskier assets such as cryptocurrencies, as traders move away from interest-bearing investments like bonds. Indeed, Powell’s words initially fueled a rally across both digital assets and stocks.
But the surge did not last long. Analysts suggest that the sudden rise invited new sellers into the market. According to FxPro analyst Alex Kuptsikevich, Bitcoin slipped below its 50-day average after Friday’s rally, signaling that profit-taking and technical pressures may have taken over.
Whale Activity and the Flash Crash
Adding to the pressure, several reports pointed to a large Bitcoin holder commonly referred to as a “whale” who began unloading assets over the weekend. This triggered what traders call a “flash crash,” sending shockwaves across the crypto market and amplifying the losses of major tokens like Ethereum and XRP. Such whale movements are not unusual in the crypto industry, but they often cause sudden volatility since massive sell-offs can disrupt liquidity and shake investor confidence.
Crypto Stocks Also Take a Hit
The turbulence wasn’t limited to digital currencies themselves. Crypto-related stocks also moved lower after markets opened on Monday. Shares of MicroStrategy (MSTR), the largest corporate holder of Bitcoin, fell more than 4%. Coinbase (COIN), one of the most popular crypto exchanges, also faced selling pressure, reflecting broader investor uncertainty.
What Investors Should Keep in Mind
For seasoned investors, such ups and downs are nothing new in the world of digital assets. The crypto market thrives on momentum and sentiment, making it more sensitive to sudden shifts in news, economic outlook, and large-scale trades.
While Powell’s hint at a rate cut still suggests potential long-term support for risk assets, short-term volatility remains the hallmark of this market. For newcomers, this weekend’s events serve as a reminder: the crypto market rewards patience but demands caution. Prices can swing dramatically in a matter of hours, and even positive news can quickly turn into a selling opportunity for large players.
The recent downturn shows that the crypto market is still highly unpredictable, even in the face of seemingly supportive economic signals. Whether this dip is just a short-term correction or the beginning of a larger trend remains to be seen. What’s clear is that crypto remains a space where opportunity and risk go hand in hand.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Cryptocurrency investments are highly volatile and involve risk. Always conduct your own research or consult a financial advisor before making investment decisions.
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