Bitcoin and Ethereum Nosedive as Economic Data Douses Interest Rate Cut Expectations

Bitcoin fell to $96,200 late afternoon before dip-buying propelled the leading cryptocurrency up a few notches. This comes a day after it hit $100,000 after a gap of more than two weeks.

Major cryptocurrencies declined on Tuesday evening as the latest economic data seemed to dampen expectations regarding interest rate cuts.

What Happened: Bitcoin dropped to $96,200 late afternoon, but dip-buying appeared to help the leading cryptocurrency recover somewhat. This occurred a day after it hit $100,000 following a gap of over two weeks.

Ethereum saw a steeper decline as the second-largest cryptocurrency lost nearly 8% of its value in 24 hours, plunging to $3,880.

Cryptocurrency liquidations hit $559 million in the last 24 hours, marking the highest level since Dec. 2020. Of this total, over $500 million was attributed to long liquidations.

Top traders on Binance appeared to be buying the dip, with over 63% of them showing a net long position on Bitcoin, compared to 36% shorting the cryptocurrency.

About $555 million in short positions faced the risk of liquidation if Bitcoin rebounds to $100,000.

The downturn shifted the market sentiment from "Extreme Greed" to "Greed," as indicated by the Crypto Fear & Greed Index.

Top Losers (24-Hours)

The global cryptocurrency market capitalization decreased by 5.29% to $3.39 trillion in the last 24 hours.

Stock market equities experienced a sell-off on Tuesday. The Dow Jones Industrial Average closed down 178.20 points, or 0.42%, at 42,528.36. The tech-heavy Nasdaq Composite slipped 1.89% to end at 19,489.68, while the S&P 500 dropped 1.11% to 5,909.03.

The decline came after a report showed that the U.S. services sector grew more than expected in March, but a sharp increase in the Prices Index raised concerns regarding inflationary pressures.

According to the CME FedWatch tool, traders priced in a 95% chance that the current interest rate range of 4.25%-4.50% will remain unchanged, up from 91% the previous day.

As equities sold off, yields on risk-free debt rose. The benchmark Treasury yield hit 4.69, which was its highest level since late April.

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Analyst Notes: Popular cryptocurrency analyst Michaël van de Poppe commented on Bitcoin's latest correction.

"Couldn’t hold above $98-100,000 and we’re dropping down. Likely this is going to give a period of consolidation," the analyst predicted.

However, he added that once the correction ends, the entire market will rally, with altcoins showing the "strongest bounces."

The chop on #Bitcoin continues. Couldn't hold above $98-100K and we're dropping down. Likely this is going to give a period of consolidation.

Correction over? Bounce on the entire markets, strongest #Altcoins have the strongest bounces.

Ali Martinez, a widely followed cryptocurrency expert, highlighted the importance of $97,000 as support for Bitcoin.

"If this support holds, BTC may rebound. A break below $97,000, however, could open the door for a dip to $92,000," Martinez projected.

The TD Sequential indicator flashes a buy signal on the #Bitcoin $BTC hourly chart, right above the setup trend line and the 200-hour MA, near $97,000. If this support holds, #BTC may rebound. A break below $97,000, however, could open the door for a dip to $92,000. pic.twitter.com/jevgNgKyEf

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