The cryptocurrency market has recently taken a sharp dive, with major assets such as Bitcoin (BTC), Ethereum (ETH), and XRP experiencing substantial losses. Amidst growing uncertainty, fears surrounding the U.S. political situation and the upcoming Federal Open Market Committee (FOMC) meeting have created a storm of negative sentiment. These developments have driven the market from a bullish rally to a full-blown correction.

Why the Crypto Market is Crashing?

A combination of political turbulence and economic concerns has been at the heart of the current crash. The U.S. presidential election has led to increased market anxiety, especially in light of an assassination attempt on former president Donald Trump. Coupled with the upcoming FOMC meeting, which is expected to address potential interest rate cuts, investors are facing an unpredictable environment.

This turmoil has caused widespread sell-offs, as traders fear potential market impacts. The market cap has dropped from $2.1 trillion to $2.03 trillion, with major altcoins such as Solana (SOL), XRP, and Dogecoin (DOGE) contributing to the decline.

Bitcoin Volatility Continues

Bitcoin, which briefly traded above $60,000, has seen its value dip below that level. Investors are closely watching the FOMC meeting, where a potential interest rate cut might be announced. Traders expect a rate cut, with the CME FedWatch tool indicating a 61% likelihood of a 50 basis points (bps) reduction and a 39% chance of a 25 bps cut. This could have a profound impact on market sentiment.

The uncertainty surrounding this meeting has made traders cautious, as many have sold their BTC positions ahead of the announcement. Coinglass reported a liquidation spree, with $35 million in Bitcoin liquidations and $30 million in long positions wiped out. Bitcoin touched a 24-hour low of $58,112, breaking below the 50-day simple moving average (SMA).

Notably, Bitcoin has bounced back slightly from the 0.618 Fibonacci retracement level, now sitting close to the 0.5 Fib level. Analysts predict that the coin may remain in a sideways trading pattern near $59,000 until the outcome of the FOMC meeting is announced. If the Federal Reserve cuts interest rates by 50 bps, some traders are optimistic that the market could stage a recovery.

Ethereum Follows Suit

Ethereum (ETH) has not escaped the broader market decline. Following a whale’s sale of long-dormant ETH, Ethereum’s price dropped below $2,300, a significant loss in a short period. This major sale, combined with other large holders selling their positions, has created a bearish environment for Ethereum.

According to crypto analyst Ali Martinez, if Ethereum breaks below its key support level between $2,290 and $2,360, it could see an even steeper decline, possibly reaching as low as $1,800. The sharp 6% drop in Ethereum’s price over the past 24 hours suggests that further downside is possible if bearish sentiment persists.

Altcoins React to Bitcoin and Ethereum’s Declines

The ripple effect of Bitcoin and Ethereum’s downturns has hit altcoins hard. XRP, which had managed to hold above $0.60 for some time, has now fallen to $0.572. Over the past 24 hours, its trading volume has dropped by 23%, indicating reduced activity and interest.

Solana (SOL) is also experiencing selling pressure, currently priced at $131.01, down by 3.82%. Its trading volume has decreased to $1.73 billion, reflecting broader market caution. Dogecoin (DOGE), often driven by retail enthusiasm, has seen its price dip to $0.1017, falling by 2.84%, with $517.94 million in trading volume. Cardano (ADA), another prominent altcoin, has also dropped, although to a lesser extent, currently priced at $0.0008529, with a 2.21% decline.

What Lies Ahead for the Crypto Market?

With the global cryptocurrency market cap declining by 2.9% to $2.04 trillion, the current sentiment is one of fear and uncertainty. The Fear & Greed Index, which measures market sentiment, has dropped from 51 (Neutral) to 39 (Fear), highlighting the anxiety that traders are feeling.

While the market waits for the FOMC’s interest rate decision, there is also speculation about the longer-term effects of the U.S. election turmoil and how global markets might react. The assassination attempt on Donald Trump has only added to the unpredictable nature of the political landscape, further complicating market sentiment.

Jerome Powell’s upcoming speech and the FOMC’s rate decision will likely set the tone for the next phase of market movement. A more dovish stance from the Federal Reserve could provide some relief, but if the outcome does not meet market expectations, further declines could be in store for cryptocurrencies.

Conclusion

The crypto market is facing a significant downturn, driven by a mix of political instability, economic uncertainty, and investor anxiety. Bitcoin, Ethereum, and major altcoins are all seeing substantial losses as traders retreat from risk. With key events such as the FOMC meeting and ongoing U.S. election turbulence, the market’s near future remains uncertain. Investors will be closely watching for any signs of stabilization, but caution is likely to prevail until clearer signals emerge from both political and economic developments.