The cryptocurrency market remained steady near the $2.5 trillion mark, showing little momentum as traders reassessed their strategies in the current environment.
Summary
The market stayed close to $2.5 trillion with limited price movement, as Bitcoin hovered above $70,000 while leading altcoins recorded slight declines.
Investor confidence weakened due to geopolitical tensions in the Middle East, rising oil prices, and a more cautious stance from the Federal Reserve after stronger-than-expected U.S. inflation data.
A shortage of fresh liquidity, cautious sentiment around ETFs, and a massive $5.7 trillion options expiry also contributed to sideways trading, alongside $393 million in liquidations.
Bitcoin, often referred to as digital gold, paused after briefly reclaiming the $70,000 level, following an 8% drop from its recent weekly peak. Ethereum slipped 2.2% to below $2,200, while other major cryptocurrencies like XRP, BNB, and Solana each declined by around 1% on Friday.
What’s causing the slowdown?
Several factors are weighing on the market.
To begin with, escalating conflict in the Middle East has reduced appetite for riskier assets. Investors are shifting funds into traditional safe havens like gold and other precious metals to protect against inflation, which is being driven higher by surging oil prices.
Gold climbed more than 2%, moving above $4,700 per ounce, while silver surged nearly 4% to around $73.
Secondly, recent inflation figures have reduced expectations for interest rate cuts this year. U.S. PPI data came in higher than anticipated at 0.7% month-on-month. Following this, Federal Reserve Chair Jerome Powell signaled a cautious outlook, emphasizing that rate cuts will depend on inflation progress and may not happen if inflation remains elevated.
Historically, cryptocurrencies and other risk assets tend to slow down or trade sideways when the Fed adopts a more hawkish tone.
Additionally, declines in major Asian stock indices such as Japan’s Nikkei 225 and China’s Shanghai Composite have added to the cautious mood. This follows weakness in U.S. tech stocks, with crypto markets often moving in tandem with high-growth tech sectors during uncertain periods.
Another factor is the record $5.7 trillion “triple-witching” options expiry on Wall Street, which can lead to heightened volatility. During such events, crypto markets often move sideways as traders wait for clarity.
Data from CoinGlass shows that about $393 million worth of positions were liquidated in the past 24 hours, mostly from long traders, indicating that many positions are being unwound amid uncertainty.
Finally, the total stablecoin market cap remained unchanged at $312 billion over the past day. This lack of growth signals limited new liquidity entering the market, which is necessary to drive a strong price recovery.
