On Tuesday, the cryptocurrency market experienced a sudden sell-off following the lead of Bitcoin which tumbled 3.8%. This supply pressure is likely sparked by the market uncertainty ahead of the UP CPI data release scheduled for Wednesday.
Higher-than-expected CPI figures indicate rising inflation, which can lead to increased interest rates by the Federal Reserve. Higher rates make borrowing more expensive, reducing liquidity in especially in riskier assets class Bitcoin and other cryptocurrencies.
In a recent analysis, James Van Straten, Lead Analyst at Cryptoslate, reported a significant spot-selling event for Bitcoin, primarily from Binance, amounting to over $200 million. He noted that Bitcoin tends to dump before FOMC and CPI announcements due to market overreactions, with a potential reversal post-events.
Spot selling started this morning, primarily coming from Binance over $200M.#Bitcoin tends to dump into FOMC and CPI (market overreacts), which should reverse after events.
Open Interest is now at an 18-month high, coupled with 10% funding rates (potential for a short-squeeze)… https://t.co/QmHhznI3x5 pic.twitter.com/9GoHdkIpdw
— James Van Straten (@jvs_btc) June 11, 2024
Van Straten also highlighted that open interest is at an 18-month high and a 10% funding rate, suggesting a potential short squeeze.
While the crypto market has been wavering sideways for the last three weeks, an increased sell-off could trigger a notable downfall in Altcoins such as Cardano (ADA), Dogwifhat (WIF), and Notcoin (NOT).
Also Read: Crypto Prices Today June 11: Bitcoin Slips to $67K, ETH Below $3,600 While INJ & GNO Rally 4-9%
1) Cardano (ADA)
ADA, the native cryptocurrency of the Cardano ecosystem has been trading sideways for the past two months. Amid the broader market consolidation, the coin price resonated within two converging trend lines revealing the formation of a symmetrical triangle pattern.
Cardano (ADA)| Tradingview
On June 8th, the ADA price breached the support trendline of the triangle structure, indicating the consolidation assets sellers to recuperate bearish momentum. The post-breakdown fall plunged the asset 5% down to currently trade at $0.42, while the market cap plunged to $15.35 Billion.
If the pattern holds true and the market reacts negatively to the US CPI data, the Cardano price could extend its correction trend to $0.34.
The ADA price below daily EMAs (20, 50, 100, and 200) accentuates the past to least resistance is down.
Also Read: Ripple (XRP) v Cardano (ADA): How Crypto Market Crash Affected Inflows
2)Dogwifhat (WIF)
Dogwifhat (WIF) is a memecoin based on the Solana blockchain, featuring a Shiba Inu dog wearing a pink hat as its mascot. Despite the broader market consolidation, the WIF price managed to sustain a mid-term uptrend utilizing an ascending support trendline.
Dogwifhat (WIF)| Tradingview
The dynamic support is leading to a higher low formation in WIF’s daily chart indicating the buyers are actively accumulating this asset at market dips. However, this memecoin witnessed a notable correction in the last two weeks, falling from a high of $4.08 to $2.62 registering a 35.6% drop.
The Dogwifhat coin currently holds a market of $2.62 billion, while the 24-hour trading volume jumped 21% to bolster falling prices and hit $460.1 Million.
With sustained selling, the WIF coin will be at risk of losing the aforementioned support. A potential breakdown from the pattern’s lower trend will signal a major trend reversal and extend the current correction below $2.
Also Read: Dogwifhat Vs Bonk: Which Solana Meme Coins To Hold Until December?
3)Notcoin (NOT)
Notcoin (NOT) is a cryptocurrency project built on The Open Network (TON) blockchain, initially gaining traction as a viral tap-to-earn game on Telegram. On June 2nd, the price of NOT witnessed an immediate reversal from the $0.029 resistance resulting in a 47% drop to reach $0.015, while the market cap fell to $1.642 Billion.
Notcoin (NOT)| Tradingview
After an aggressive rally in the second half of May, a short correction was at least expected for Notcoin. However, with the market uncertainty accelerating ahead of US CPI data, the NOT coin could witness a momentum downfall.
With an intraday fall of 10.48, the Notcoin teases a bearish breakdown from the 20-day EMA slope. If successful, the sellers will strengthen their grip over this asset and may prolong the correction fall to $0.011, followed by $0.00458.
Takeaway
A highlighted volatility and notable drop in the cryptocurrency market ahead of the US CPI data release is commonly observed. The market participants’ FOMO around inflation status and potential rate cuts off may increase selling pressure in most of the major altcoins. However, after the event, the market supply pressure eases providing assets an opportunity to rebound.
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Sahil is a dedicated full-time trader with over three years of experience in the financial markets. Armed with a strong grasp of technical analysis, he keeps a vigilant eye on the daily price movements of top assets and indices. Drawn by his fascination with financial instruments, Sahil enthusiastically embraced the emerging realm of cryptocurrency, where he continues to explore opportunities driven by his passion for trading
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
