Crypto analyst Ali Martinez has provided some insight into why Bitcoin, Ethereum, and Dogecoin prices are crashing. The crypto market has been falling in recent days after starting the year with a bang.
Why Bitcoin, Ethereum and Dogecoin Prices Are Crashing
In a MessageMartinez revealed why Bitcoin, Ethereum and Dogecoin prices are crashing. He said capital was flowing into crypto market decreased over the past month, from $134 billion to $58 billion. The crypto analyst added that this indicates a significant reduction in investment activities.
Simply, there has been a lack of liquidity in the crypto market, which has caused the prices of Bitcoin, Ethereum, and Dogecoin to fall. Bitcoin led this downtrend, falling to $92,000 after its launch. price recovery greater than $100,000 at the start of the year. Given their strong price correlation with the flagship crypto, Ethereum and Dogecoin followed suit and suffered a similar downtrend.
The lack of inflows into the crypto market is likely due to bearish investor sentiment sparked by macroeconomic developments. Recent strong US jobs data have dashed hopes for a Fed rate cut. Instead, traders are now predicting there will be just one rate cut this year, likely in October.
This presents a bearish outlook for Bitcoin, Ethereum, and Dogecoin prices as investors are less likely to invest in these risky assets in the absence of such quantitative easing policies.
Rate cuts typically lead to increased liquidity, giving investors the confidence to invest in risky assets like cryptocurrencies. To recall, there were three Fed rate cuts last year, which provided a huge boost to the crypto market. Bitcoin surpassed $100,000 for the first time in its history.
Other Onchain Metrics Also Highlight Bearish Sentiment
There are other on-chain metrics that highlight the bearish sentiment in the crypto market and explain why the prices of Bitcoin, Ethereum, and Dogecoin have crashed. In another X post, Martinez revealed that the number of significant transactions on the network BTC has decreased by 51.64% over the past month, from 33,450 to 16,180. The crypto analyst added that this could indicate a significant reduction in whale activity.
A reduction in whale activity is bearish for Bitcoin, considering how this class of investors puts the flagship crypto into price discovery when it accumulates. As such, BTC is destined to collapse, with these whales choosing to stay away until market conditions improve.
Meanwhile, Martinez revealed that Bitcoin network activity fell to its lowest level since November, with only 667,100 active addresses. This once again highlights the current bearish sentiment among investors.
Featured image created with Dall.E, chart from Tradingview.com
