Crypto Market Freefall: Bitcoin and Ethereum Erases Earlier Gains, Here’s Why

The crypto market witnessed a sudden freefall as the U.S. dollar index (DXY) jumps to a 20-year high of 112.87. Top cryptocurrencies including Bitcoin (BTC) and Ethereum (ETH) fell over 2% in an hour.

Bitcoin was trading over the  $19k level, but tumbled to $18.6k after the sell-off. Whereas, Ethereum (ETH) was earlier trading near $1,350, up over 5%. However, the price retraces to $1,258, losing earlier gains.

Crypto Market Erases Gains as the US Dollar Jumps Higher

The U.S. Dollar Index (DXY) jumps 1.34% higher to 112.87 on September 23. As a result, the crypto and equity markets fall sharply as recession fears mount. Dow Jones, S&P 500, and Nasdaq Composite indices dropped over 1.5% as investors’ sentiment fades amid the strong U.S. dollar.

The crypto prices tumbled amid the market-wide sell-off as the strong U.S. dollar bleaks the crypto outlook. Bitcoin’s (BTC) price fell over 4% from a high of $19,464 to $18,617, taking down the crypto market. The BTC price is currently trading at $18,742.

Meanwhile, the Ethereum price (ETH) price plummeted by nearly 5%, falling to $1,258 from the day high of $1,353. The ETH price is currently trading at $1,290.

Whereas, the top crypto gainer of the market XRP, which was trading over 35% in the last 24 hours, fell over 11% to $0.47. Other cryptocurrencies also followed the top cryptocurrencies and erased earlier gains.

The Fed on Wednesday raised the interest rate by another 75 bps. The crypto market tumbled as Fed Chair reiterates a hawkish outlook in an effort to control inflation. However, experts fear rate hikes increase the possibility of a recession. Economist Nouriel Roubini, who predicted the 2008 financial crisis, warns of a global recession in 2022-2023.

Macros Put Pressure on the Market

The crypto market sentiment index has again fallen to 20 as macros continue to increase fear among traders. Experts believe the Bitcoin price may fall below $15,000, as per historical chart patterns.

Meanwhile, the Ethereum price risks falling below $1,000 if the price breaks below $1,270 and fails to rebound from the level. However, ETH price has formed a bullish divergence pattern and is most likely to move higher.