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Bitcoin (BTC) regained stability on Wednesday morning following a tumultuous episode during late-night European trading hours, where the apex cryptocurrency nosedived over 6% and sank as low as $58,090 in a matter of minutes.
At the time of writing, Bitcoin is trading down 5.8% over the last 24 hours.
The ripple effect of this decline has been felt across the broader cryptocurrency market, with Ethereum (ETH), the second-largest cryptocurrency by market capitalization, experiencing an even steeper fall of 8.2%. At the time of writing, ETH is currently trading at $2,461, according to CoinGecko data.
Other major cryptocurrencies have not been spared from the market turbulence. Solana (SOL) has dropped 7.5%, Dogecoin (DOGE) by 6%, Avalanche (AVAX) is down 8.5%, and Shiba Inu (SHIB) is 5.4% lower than it was this time yesterday. indicating a widespread market correction.
The Open Network token, TON, faced its own challenges, trading down 1.3% over the last 24 hours despite resuming block production after a nearly six-hour outage. The network disruption, reportedly caused by a surge in transactions related to the popular DOGS meme coin, raised concerns about TON's scalability and security.
More broadly speaking, analysts at 10x Research wrote the liquidations began around the same levels as when Bitcoin approached the $62,000 resistance, a barrier that had held since August 8.
The research firm suggests that the market may have misinterpreted recent comments from Federal Reserve Chair Jerome Powell, focusing too heavily on the prospect of imminent monetary easing.
"This viewpoint oversimplifies the situation, as rate cuts do not necessarily equate to immediate stimulus," the 10x Research team cautioned. They emphasize that Powell's speech highlighted weaknesses in the labor market, potentially signaling significant risks ahead for the economy.
"Like a skilled poker player, a trader doesn't always need to go all-in with their entire position. Today's drop is intriguing and presents a potential opportunity for those looking to capitalize on a tactical rally,” the team further added.
Meanwhile, data from Stocklytics.com revealed an interesting trend in Bitcoin's market dominance. Despite the recent price volatility, Bitcoin's dominance ratio hit nearly 60% in August, the highest share since early 2021.
The figure suggests that despite price fluctuations, Bitcoin continues to maintain its position as the leading cryptocurrency in terms of market share.
"Bitcoin's impressive performance and a double-digit price gain have also significantly impacted its dominance ratio, pushing it high above the levels seen last year," Stocklytics.com stated.
This increased dominance comes amid growing institutional interest in Bitcoin, with major financial firms like BlackRock and Fidelity showing increased engagement with the cryptocurrency space.
However, it's worth noting that while Bitcoin and a few other major cryptocurrencies have seen their dominance ratios grow, it comes at the expense of other altcoins.
Ethereum's market share, for instance, dropped from 18.1% to 14.6% over the past eight months, indicating a shift in market dynamics.
Meanwhile, in its latest report, Fairlead Strategies cautioned about a "seasonally weak period in September." The firm wrote that markets could be in for "another two months of corrective price action.”
Edited by Stacy Elliott.