The crypto market crash resumed last week as Bitcoin and most altcoins plunged by double digits. Bitcoin remains below the key support at $90,000, while Ethereum has dropped to $3,000. Other tokens like Cardano, Shiba Inu, and Dogecoin have also plummeted by double digits.
Crypto market crash could stall in case of a more dovish Federal Reserve
One potential catalyst that may help to stall the crypto market crash is the upcoming Federal Reserve interest rate decision,which will come out on Wednesday this week.
Historically, the final decision has been one of the most important ones in the market as it sets the tone for what to expect in the new year.
This meeting will be key because it will shed more light on the divisions among officials, with some of them supporting cuts and others supporting a pause.
For example, an official like Jeff Schmid has opposed cuts, arguing that inflation has remained above the target point of 2% for over 4 years. He argues that cutting interest rates will stimulate inflation.
On the other hand, some Fed officials argue that the bank should cut rates because of the cracks in the labor market. A report released last week showed that the economy lost 36,000 jobs, the worst performance in over 2 years.
Therefore, an interest rate cut and a dovish policy may help to end the ongoing crypto market crash.
Cardano Midnight mainnet launch
The other main catalyst for the crypto market will be the upcoming Midnight launch by Cardano, the tenth biggest coin in the industry.
Midnight is a major project that has been developed in the past few years, and Charles Hoskinson and the team believes that it will solve the main challenges facing the network.
For example, they expect that Midnight will boost the network’s stablecoin volume and decentralized finance (DeFi) total value locked, which has lagged the market in the past few years.
Still, it is unclear whether the Midnight launch will have a positive impact on the crypto market, as Charles Hoskinson has a known record of overpromising and underdelivering.
Top token unlocks
The other main catalyst that may have a negative impact on the crypto market is the upcoming token unlocks. Data compiled by DeFi Llama shows that tokens worth over $30 million will be unlocked this week.
Flare tokens worth over $3.4 million will be unlocked this week. Historically, the FLR token normally drops by about 10% ten days after the unlock.
Meanwhile, $10 million worth of EigenLayer tokens will be unlocked on Wednesday, while $20.3 million worth of Bluefin will be released. Other major tokens with unlocks this week are Aptos, Story, Arbitrum, and Starknet.
Crypto ETF inflows
One reason behind the ongoing crypto market crash is that American investors have been pulling their assets from crypto ETFs. Data shows that spot Bitcoin ETFs shed over $87 million in assets last week. BlackRock’s IBIT ETF has shed over $2.7 billion in assets in the last few months.
Ethereum ETFs also shed over $65 million in assets last week, bringing the cumulative total inflows to over $12.8 billion. On the other hand, tokens like XRP, SOL, DOGE, LINK, and HBAR ETFs have done well in terms of inflows. A surge in inflows may help to offset the ongoing crypto market crash.
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