The cryptocurrency market experienced a significant pullback on Tuesday, with Bitcoin (BTC) plunging below $122,000 after reaching record highs above $126,000. This decline erased the past three days of gains, resulting in a 2.4% drop in 24 hours, as analysts highlighted signs of an overheated rally. The sell-off rippled across the market, affecting altcoins like XRP (XRP), Dogecoin (DOGE), Cardano (ADA), and Avalanche (AVAX), which fell between 5% and 7% during the period.
Historical patterns underscore this volatility: Bitcoin's year-to-date gain of 31% has been punctuated by rapid sell-offs after each peak. For instance, a surge to $109,000 in January reversed to $75,000 within three months, and similar declines followed July's move above $123,000 and mid-August's surge past $120,000. The current dip follows a near-vertical 16% pump from late September lows below $109,000.
Analysts weighed in on the situation. Jean-David Péquignot, CCO of Deribit, projected in a Monday report that BTC could revisit the $118,000-$120,000 zone, shaking out latecomers to the rally. He suggested this pullback might offer a buying opportunity, with technicals and macro factors aligning for a potential run above $130,000 by year-end. Meanwhile, Vetle Lunde, head of research at K33, noted that derivatives and ETF inflows had overheated, with the past week marking the strongest BTC accumulation of the year—63,083 BTC (roughly $7.7 billion) added across U.S. ETFs, CME, and perpetual futures. Lunde warned that such bursts often coincide with local tops, increasing the risk of short-term consolidation.
In broader economic news, Federal Reserve Governor Stephen Miran, a recent Trump appointee, stated that his view of the neutral interest rate had shifted to 0.5%, citing tighter immigration restrictions and evolving federal deficit expectations. His comments, made at the Managed Funds Association Policy Outlook 2025, suggested long-term economic changes but expressed optimism for steadier growth ahead as policy uncertainty clears. Fed officials are set to meet later this month to discuss potential rate cuts, though a government shutdown complicates data availability.
The crypto sell-off also impacted related stocks, with MicroStrategy (MSTR) down 7% and Coinbase (COIN) falling 4%. Ether-focused companies like Bitmine Immersion (BMNR) and Sharplink Gaming (SBET) declined by 3% and 7%, respectively, while Bitcoin miners such as MARA Holdings and Riot Platforms (RIOT) saw losses of 4% and 3%.
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