The crypto market faced a sharp correction this week, with Solana (SOL) plunging 16% and showing a 19% loss over the past seven days. Dogecoin (DOGE), XRP, and Ethereum (ETH) also suffered heavy losses, each down more than 13%. Meanwhile, Bitcoin (BTC) dipped below the $90,000 mark, a level not seen since November.
Crypto Correction Continues
The total crypto market cap dropped by 6.8%, and analysts suggest that the bearish sentiment might be exaggerated. Macro-economic factors seem to be the driving force behind the current downturn.
According to Jeff Mei, COO of crypto exchange BTSE, Bitcoin, Ethereum, and Solana are currently undervalued. He noted, “Inflation concerns and the Fed’s cautious approach are weighing on the U.S. market. However, last week’s weak economic data might force the Fed to act sooner.”
Here’s where the key cryptos currently stand:
- Solana (SOL): $134.95
- Dogecoin (DOGE): $0.2015
- XRP: $2.15
- Ethereum (ETH): $2,368
- Bitcoin (BTC): $89,354
These prices highlight the market’s ongoing pressure, though they could shift quickly depending on economic conditions and investor sentiment.
Will Interest Rate Cuts Spark a Crypto Rebound?
One potential game-changer could be a rate cut from the Federal Reserve. Such a move would likely boost both gold and Bitcoin, as investors seek safe havens against a weakening U.S. dollar.
Inflation: A Key Market Driver
Inflation continues to be a major factor. The U.S. Consumer Price Index (CPI) rose 0.5% in January, exceeding the 0.3% economists had expected. This surprise increase led many investors to shift towards cash and safer assets, anticipating future economic stimulus.
Historically, Bitcoin and other cryptocurrencies have been viewed as a hedge against inflation, often rallying when fiat currencies show signs of instability. If inflation remains high and the Fed steps in with supportive measures, it could reignite the crypto bull market.
Crash or Correction?
While the current downturn is significant, it doesn’t necessarily signal the end of the bull run. Sharp corrections are common in upward trends. If the Fed lowers interest rates or introduces other economic stimulus packages, the market could quickly reverse its course.
For now, expect continued volatility as crypto prices remain sensitive to macroeconomic developments.