The crypto marketplace has entered a phase of correction, wiping out several billion in total market capitalisation. In association with all other major cryptos, Dogecoin (DOGE) and Solana (SOL) led this decline. High leverage, increased selling and broader macro uncertainty, they say, exacerbate the loss.
Dogecoin and Solana See Record Losses
Dogecoin currently trades at $0.3756 and has witnessed around 12% price drop, one of the largest in this crypto market correction. Price recovery couldn’t take place in spite of 60.9 billion DOGE transacted in 24 hours due to enormous selling pressure. Large transactions increased 41.2% but didn’t help DOGE investors.
Solana followed with a 10% drop to $227. Overbought conditions and general market correction is crushing the token. Token market cap on Solana has lost over $100 billion in a day. Although, Solana’s trading volume increased 43.2% but that’s just a sign of more selling and not good market sentiment.
Market Wide Impact and Liquidations
Other major cryptos like BTC and ETH are also down. BTC lost 6.1% and ETH 4.5%. The altcoins which got affected the most include Cardano’s ADA and XRP, which were both down 14.7% and 10.7% respectively. During the last 24 hour, the total cryptocurrency market cap went down by a hefty 5% as it comes down to about $3.2 trillion.
Liquidations have also increased, adding more fuel to the fire. According to CoinGlass, total liquidated crypto positions is over $691 million, of which $150 million is Bitcoin. The largest liquidation was on Binance for $4.67 million on a long position. Over 180,000 accounts have been liquidated, highlighting the risks of high leverage in volatile market conditions.
QCP Capital called it a “necessary correction” since the market was too leveraged. According to the firm, this will reset the market and will provide a good environment for sustainable growth.
Economic Indicators and Market Outlook
The crypto market’s performance is also influenced by broader economic developments. Bitcoin’s drop coincided with $435 million outflow from spot exchange-traded funds on Monday, breaking the streak of net inflows. This is a sign of investor caution as Federal Reserve policies and inflation uncertainty grows.
What the minutes of the next federal open market committee meeting will divulge more about would be the future course of monetary policy, especially following the recent cut in interest rates. Further, the Personal Consumption Expenditures (PCE) data will hit the markets a few days before Thanksgiving and more than liking will provide evidence depicting inflation heating up, which will factor in the Fed’s decision to raise interest rates in December.
Despite the drop, not all are bearish. Real Vision CEO Raoul Pal said the correction is part of the crypto market cycle and a strong bounce back should be expected. He also said in the long term, Dogecoin could outperform Bitcoin. But for now the concern is excessive leverage and market overheating.
What is the future of crypto investors?
The current drop in the crypto market shows the dangers of high leverage and speculation. If the market is not stabilized, more corrections will come, but for some, it’s an opportunity to reset the overbought positions and lay the foundation for a more sustainable market.
The path the market will take is more likely to be decided by future economic reports and policy announcements. Short term investors stay cautious as volatility will continue in the near term.
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