The cryptocurrency market is facing another major correction, with Bitcoin (BTC) falling to the $76,000 price level. According to CoinGlass crypto data, the crypto market faced $660.06 million in liquidations in the last 24 hours. Let’s why the cryptocurrency market faced such a steep price dip in such short period.
Why Is The Cryptocurrency Market Facing A Price Correction?
The latest price dip comes amid higher than anticipated inflation data. Not only that, rising bond yields and higher oil prices have flipped anticipations of an interest rate cut into a possible rate hike. Investors have likely restarted their risk-off approach, quitting high-risk assets, such as cryptocurrencies.
Many anticipate oil prices, and consequently, US bond yields, to continue rising over the coming months. Such a development could put additional macroeconomic pressure. Many thought that the Federal Reserve would reduce interest rates after Kevin Warsh assumes office. However, the currency situation has put a stop to such expectations. Cryptocurrencies often take a hit when rates remain high for longer as borrowing becomes more difficult.
Additionally, the highly anticipated CLARITY Act seems to be facing trouble. The legislation requires 60 votes to pass. Republicans hold only 53 seats. This means that 7 Democrats need to support President Trump’s cryptocurrency clarity bill. However, many have questioned the CLARITY Act, demanding an ethics language to limit people in power to profit from cryptocurrency dealings, eyeing President Trump’s crypto empire. Additionally, banking groups are rallying against the bill to include new language to prohibit stablecoins yields, in the fear of people moving away from savings accounts. If the CLARITY Act does not go through, the cryptocurrency market could face additional challenges, and a dip in confidence.
Also Read: Top 3 Cryptocurrencies If You Want To Be Anonymous
The cryptocurrency market struggled to gain steam over the last few months. Many were hopeful that the market would turn around by now, but by the look of things, we may remain in bear territory for quite some time.
