Bitcoin (BTC) and most altcoins have plunged in the past few days, erasing some gains made in 2024 and costing many crypto investors billions. XRP price has slumped to $3.38, down 30% from its November highs.
Jasmy Coin, popularly known as Japan’s Bitcoin, has slipped to $0.02233, down by over 62% from the same period. Popular meme coins like Shiba Inu and Pepe Coin slumped by double digits.
Crypto Fear and Greed Index Falling
Altcoin prices have slumped this year as fear has returned in the market. The crypto fear and greed index has slumped to 35, down from last year’s high of over 90. It has crashed to its lowest level since October last year.
This fear also affects other parts of the market, as the CNN Money fear and greed index has moved to a fear zone of 39.
Investors are fearful because the United States recently announced a trade war with its top trading partners, including China, Mexico, and Canada.
While these events are unrelated to cryptocurrencies, they impact all financial assets. For one, a trade war will lead to higher inflation and push the Federal Reserve to be highly hawkish.
Cryptocurrencies and other assets often underperform the market when the Fed is hawkish.
Buy the Rumor and Sell the News
The other main reason altcoins like Jasmy, Shiba Inu, and Pepe coin have crashed is by buying rumors and selling the news.
Most altcoins surged hard after Donald Trump’s victory in the November election. The election was a notable development because he was the first president to campaign on cryptocurrencies as a platform.
Usually, investors buy an asset ahead of a key event and then sell it when it happens. For example, the Ethereum price rose ahead of the ETF approval in 2024 and then crashed after they started trading. Bitcoin price also remained under pressure after last year’s halving event.
Wyckoff Method Explains the Pepe, Jasmy, and XRP Crash
The other main reason these altcoins have crashed is the concept of the Wyckoff Method. This is a traditional approach that explains how cryptocurrency prices do over time. An asset’s price action mostly starts with the accumulation phase, characterized by weak trends.
It then attracts investors, who push it higher during the markup or fear of missing out (FOMO) phase. This phase comprises animal spirits and is characterized by a surge.
As shown in the Pepe price above, most of these coins have entered the distribution and markdown phase.
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