Crypto Market Plunges as Traders Bounce Off False Rally

The crypto market opened in red on Tuesday and quickly turned redder, sending shockwaves through global markets. The South Korean KOSPI index fell more than 8% at the open, triggering a circuit breaker.

Bitcoin's response was swift: it dropped to $62,684, briefly attempted recovery, and then stalled. At one point, Bitcoin was trading at $63,400, down 2.7%, with Ethereum at $1,875 (-4.2%) and Solana at $73 (-4.4%).

The market saw over $670 million in crypto liquidations in 24 hours, with $533 million coming from long positions, a sign that too many traders bet on a rally that wasn't real.

The Federal Reserve's upcoming meeting has traders on edge, as they expect the Fed to hold interest rates steady at 3.50-3.75%. However, memories of last month's hawkish press conference by Fed Chair Kevin Warsh have led to deleveraging and a bearish trend in markets.

The technical picture for Bitcoin is not looking good either. The 200-day exponential moving average (EMA) has been broken, and the Relative Strength Index (RSI) is at 46.5, below 50, indicating a bearish lean. The Squeeze Momentum Indicator has also been active for nine bars, suggesting that something is building up.

The prediction market on Myriad shows traders placing 65.7% odds on Bitcoin hitting $55,000 first, rather than its current price target of $84,000. This indicates that the crowd has been repricing Bitcoin's downside and sees a bearish trend in the making.