The crypto market is going down today with an 8.46% dip in the total market capitalization and a whopping 28.07% drop in total crypto market trading volume. As the prices of top cryptocurrencies are slumping, a strong bearish trend seems to follow. Let us understand the reasons behind this fall and analyze if it continues.

Top Cryptocurrencies Are in Red

Coming to the prices of the top 10 cryptocurrencies, most of them are in red as of February 01, 2024. The Bitcoin price dropped below the $42,000 mark earlier today and is now trading at around $42,156 with a 2% dip in the last 24 hours.

The second largest cryptocurrency by market capitalization, Ethereum is also recording notable losses. Ether plunged to $2,243 a few hours back and is slowly climbing and hovering around the $2,270 level. In the last 24 hours, Ethereum price dropped by 3% but it is still managing to trade above $2,200.

Being stablecoins, there is not much difference when it comes to the prices of both USDC and USDT. They are maintaining their dollar peg as of today. But, the XRP price dropped significantly by 4% and is currently trading at $0.493. Adding to that, the Solana price and Binance Coin price are also trading in red with 6% and 3% drop respectively.

FOMC Impact on the Crypto Market

In the recent Fed meeting that happened on Jan 31, 2024, the US Fed decided to keep the internet rates unchanged at 5.25% – 5.5%. This is the fourth time in a row that the Fed kept the interest rates the same and is expected to cut down in the upcoming meetings.

Even though the economic situation has improved compared to previous couple of years, there is a long way to go before we see considerable cut down on interest rates and the economic situation to go back to before the pandemic.

While the federal fund rates being the same is not bad news compared to the aggressive rate hikes that happened post pandemic, it is not a good enough reason to make the crypto market rally.

Immediately after the FOMC meeting, the crypto market responded with a drop in overall market capitalization. Since the Fed interest rates remain the same and there is no noteworthy rise or drop, it might take a few months to demonstrate its impact on the crypto market.

Meanwhile, the crypto market is falling with several top cryptocurrencies trading in red. The stock market has also witnessed drop since rate cuts might happen in the upcoming meetings but didn’t happen in the recent meet.

Ripple Theft Caused XRP Price to Drop

When the news of Ripple co-founder Chris Larsen’s wallet being hacked surfaced, it started impacting the market price to a great extent. A report from ZachXBT revealed the theft on Jan 31, 2024 and mentioned that 213 XRP coins worth $112.5 million were lost from Larsen’s personal XRP account.

Yesterday, there was unauthorized access to a few of my personal XRP accounts (not @Ripple) – we were quickly able to catch the problem and notify exchanges to freeze the affected addresses. Law enforcement is already involved. https://t.co/T3HtKSlzLg

— Chris Larsen (@chrislarsensf) January 31, 2024

In response to that, Chris Larsen posted saying that the hack was detected quickly and they notified the exchange to freeze the addresses. He further mentioned that law enforcement was already involved. The theft has created FUD in the market and caused a drop in the XRP price, adding to the already underperforming market.

Will the Crypto Market Drop Continue?

It is difficult to say for sure, whether the current market drop continues or rebounds. Considering the outcomes of the Fed meeting, the contract interest rate is a positive sign for the crypto industry. But, if the interest rates were cut down, it would have made the market go up.

Even though the crypto market responded with a drop immediately after the meeting, it is more likely to rebound in a few days. Because the indifference in interest rates is not a negative sign for the crypto market in the long run.

On another note, there is a possibility for a bull market to come in the next few months after the upcoming Bitcoin halving event. Meanwhile, the market is still offering cryptocurrencies at discounted prices for long-term investors.

The post Why is the Crypto Market Falling Today? appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am