Crypto Market Plunges: Bearish Sentiment and Regulation Tighten Grip

Amidst unfavourable market sentiment and regulatory scrutiny, the cryptocurrency market experienced a decline on Tuesday. Bitcoin fell 1.63% to $62,000, while Ethereum shed 2.15%. Despite this, bullish sentiment prevailed for Bitcoin, with traders favouring long positions at a ratio of 1.11:1. The overall cryptocurrency market cap shrank by 1.84% to $2.3 trillion, while the global stock market witnessed gains.

Cryptocurrency Market Plunges Amid Bearish Sentiment and Regulatory Pressure

The cryptocurrency market plummeted further on Tuesday, extending its downtrend as investors remained cautious amid a flurry of regulatory actions targeting digital asset entities.

Market Leaders Succumb to Losses

Bitcoin, the industry bellwether, sank to $62,000, marking a significant 1.63% drop over the previous 24 hours. This precipitous decline wiped out over $167 million worth of active positions within that period, with long liquidations accounting for a staggering 77% of the total.

Ethereum, the second-largest cryptocurrency by market capitalization, also suffered significant losses, shedding 2.15% within the past day. This decline resulted in $43.48 million in liquidations, closely trailing Bitcoin's $40.80 million in liquidated positions.

Short-Term Surge in Long Positions

Despite the unfavorable price action, the number of traders taking long positions on Bitcoin surged in the past 24 hours, surpassing those shorting the coin by a ratio of 1.11:1. This suggests that some investors remain optimistic about Bitcoin's long-term prospects, despite the current volatility.

Regulatory Woes Cast a Shadow

The ongoing regulatory scrutiny has cast a shadow over the cryptocurrency market, with brokerage agency Robinhood Markets Inc receiving a Wells Notice from the SEC. This notice signals the SEC's intention to pursue enforcement action against Robinhood, making it the latest cryptocurrency firm to come under the radar of U.S. regulators.

Notable Gainers Amidst the Market Tumult

Despite the overall bearish sentiment, a few cryptocurrencies managed to buck the trend and record gains. AIOZ Network (AIOZ) emerged as the top gainer in the past 24 hours, surging by 9.73% to $0.8088. Ethena (ENA) and Chiliz (CHZ) followed closely, rising by 5.26% and 3.57%, respectively.

Technical Analysis Reveals Buying Zones

According to insights from on-chain analytics firm Santiment, many of the major cryptocurrencies in the market have entered buying zones. This conclusion is based on the Relative Strength Index (RSI), a popular technical analysis indicator.

Ethereum's RSI was observed to be disproportionately higher compared to other assets, indicating its potential vulnerability to a further downturn. Conversely, Cardano's RSI was recorded at a low level, suggesting its status as a possible "buy low" candidate.

Analyst Perspectives on Market Dynamics

Cryptocurrency analyst Michael van de Poppe commented on the prolonged slump in the altcoin market since the approval of spot Bitcoin ETFs. "Altcoins are still within their longest bear market since existence. The probability of an extended than four-year cycle increases day-by-day," he remarked.

Another well-known cryptocurrency researcher and trader, Kevin, shared similar observations. "I've posted everything I can find numerous times and nothing has changed in months... there's no money flowing around Crypto. I'm not going to feed you guys the same content over and over," he stated.

Stock Market Moderation

While the cryptocurrency market endured a precipitous decline, the stock market exhibited a more subdued performance on Tuesday. The Dow Jones Industrial Average rose slightly by 0.08% to close at 38,884.26, while the S&P 500 gained 0.13% to end the trading session at 5,187.70 points. The tech-heavy Nasdaq Composite, however, retreated by 0.1% to 16,332.56 points at market close.

Economic Landscape

The yield on the 10-year Treasury bond rose modestly by less than 1 basis point to 4.63% as of 9:30 p.m. EDT. Wall Street has maintained a cautiously optimistic outlook following the release of weaker-than-expected U.S. jobs data, which has fueled hopes for a more dovish monetary policy stance from the Federal Reserve.