The cryptocurrency market has dropped in value on July 16, and there are a few reasons for this. The main cause is rising inflation data in the U.S. This news has led to less hope that the Federal Reserve will cut interest rates anytime soon. Additionally, some investors decided to sell their coins after recent gains, which added to the downward pressure.
Market Overview: A Quick Look at the Decline
According to CoinGecko data, the total value of the crypto market fell to $3.78 trillion. This is down from around $3.91 trillion in just 24 hours. Bitcoin, which was trading at around $120,000, dropped to $116,000 earlier today. Ethereum also lost ground, falling below $3,000. XRP, another popular cryptocurrency, dropped by 5%, going from $3.02 to $2.78.
The Hardest Hit: Dogecoin and Others
Among the major cryptocurrencies, Dogecoin (DOGE) saw the biggest drop, tumbling by 8%. Other coins, like Toncoin (TON), Litecoin (LTC), and Bittensor (TAO), also faced substantial losses over the past day.
Large Liquidations Contribute to the Downturn
Nearly $549.3 million worth of cryptocurrency positions were liquidated in just one day. Most of these liquidations came from long positions, where investors were betting that the price would go up. This has led to even more downward pressure on the market.
Inflation and Tariffs Impacting Crypto Prices
The drop in the crypto market came shortly after U.S. inflation data was released. The Consumer Price Index (CPI) showed a 2.7% increase in prices over the year and a 0.3% increase month over month. This is the largest increase in five months, and it suggests that tariffs on major trading partners might be driving inflation.
President Trump also warned that the U.S. might impose 100% secondary tariffs on any country still trading with Russia if no peace agreement is made with Ukraine in the next 50 days. These factors have led to expectations that the Federal Reserve may not lower interest rates in the near future.
What’s Happening with Federal Reserve Rate Cuts?
The expectation that the Federal Reserve might cut interest rates in July has decreased. Analysts now think the Fed will keep the rates the same. Some believe that the rate cut may be delayed until September.
Experts have different opinions on what the Fed should do. Maksym Sakharov, CEO of decentralized bank WeFi, said that while the Fed should consider cutting rates, it must do so carefully. He said, “The Fed needs to follow the footsteps of the UK, but not as Trump expects.”
Investors Take Profits, Adding to the Decline
Another factor in the crypto market decline is that traders started taking profits. Bitcoin recently hit an all-time high of $123,091 on Monday. When the price goes up, long-term investors often sell some of their holdings to lock in profits. This is normal behavior for investors who have been holding coins for a long time.
According to Glassnode data, 56% of the people who sold Bitcoin had held it for over five months. These sales amounted to about $1.96 billion in profits. Some investors may also be reacting to the uncertainty about the Federal Reserve’s decisions.
Technical Indicators Point to Possible Dip
Finally, technical indicators suggest that the crypto market might be overbought right now. The Relative Strength Index (RSI) for the crypto market is currently 73. An RSI above 70 usually signals that an asset is overbought, meaning it could dip soon or move sideways in the short term.
