Crypto Market Cap Drops 7% as Major Tokens Fall Sharply

According to CoinDesk, the crypto market capitalization has dropped 7%, with major tokens like bitcoin, ether, and others falling sharply in the past 24 hours. The decline was triggered by higher-than-expected inflation data and profit-taking by some traders, with some analysts predicting further losses before a potential rebound. Bitcoin plunged 8% in the past 24 hours, wiping out weekly gains and kickstarting a market-wide decline. The cryptocurrency slumped from Thursday's high of $73,000 to as low as $65,800 early Friday before slightly recovering. Meanwhile, Coindesk 20, a broad-based index of most liquid cryptocurrencies, was down 8.25%. Ether, Cardano's ADA, BNB Chain's BNB, and XRP showed similar losses, while volatile meme coins dogecoin and shiba inu fell 13%. Solana's SOL tokens were the only major token in green, up 1% since Thursday. The sell-off started during the U.S. trading hours on Thursday as the February Producer Price Index (PPI) came in 0.6% higher, doubling the pace in January and doubling economist forecasts, dousing hopes for a rate cut in May. Data shows that crypto-tracked futures suffered over $800 million losses, the second-largest figure this year. Longs, or bets on higher prices, suffered $660 million in liquidations, likely contributing to the sharp downturn. Liquidation occurs when an exchange forcefully closes a trader's leveraged position due to a partial or total loss of the trader's initial margin. Some traders warned of further losses in the coming weeks before an eventual price rebound. Alex Kuptsikevich, FxPro senior market analyst, shared that new historical highs are a trigger for selling and some players are taking profits, raising questions about whether there will be enough hot buyers at current levels or if the majority will prefer to wait for a deeper correction. Kuptsikevich added that in a corrective scenario, the $65.0-65.5K and $60.0-60.5K areas are of particular interest, as they contain important round levels and the 76.4% and 61.8% Fibonacci retracement lines, which are technical tools to predict potential price support and resistance.

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