The cryptocurrency market suffered a sharp setback today, seeing total capitalization plunge by $71 billion to $3.85 trillion as stronger-than-expected U.S. economic data shifted investor expectations about Federal Reserve policy.
Bitcoin slid 1.9 percent to $115,409, narrowly avoiding the pivotal $115,000 support level, while Ethereum dropped 3 percent, hovering around the $3,200 mark as the market turned increasingly risk-averse.
Bitcoin’s current price represents a 6.8 percent decline from its all-time high of $124,128, which was reached just days earlier on August 14.
This retracement reflects a sudden shift in sentiment, as higher interest rates and stronger economic figures are dampening demand for risk assets like crypto in favour of traditional fixed-income investments.
Markets are recalibrating around the likelihood that the Federal Reserve may cut rates in September, but the stronger economic data have cooled expectations for swift action, adding downward pressure on cryptocurrency valuations.
Meanwhile, a statement from U.S. Treasury Secretary Scott that Bitcoin won’t be included in national reserves cut short some of the bullish momentum that had supported recent gains.
Analysts are watching the $115,000 level as a key psychological support zone for Bitcoin, as a sustained hold here could pave the way for a move up toward resistance near $117,261.
With Jackson Hole looming as the next major event for policy signals, the crypto market remains under intensive scrutiny, as what unfolds there may dictate Bitcoin’s next move.
