Cryptocurrency Market Faces Sell-Off: Bitcoin Drops Below $56,000

Market Update: Bitcoin and Altcoins Experience Significant Sell-Off

In an unsettling turn of events, cryptocurrencies faced a sharp sell-off early in the U.S. trading session on Wednesday, with bitcoin (BTC) plunging below the pivotal $56,000 mark. After reaching a low of $56,000, BTC had shown some resilience during the Asian and European trading hours, momentarily climbing above $57,000 in response to last night’s U.S. presidential debate featuring Kamala Harris and Donald Trump, as well as the release of the U.S. Consumer Price Index (CPI) inflation report.

However, the optimism was short-lived as the price swiftly dropped to around $55,600 in just over an hour following the opening of U.S. stock markets. Although bitcoin has managed a slight rebound, it still registers a decline of about 2% over the past 24 hours.

The broader crypto market has not been spared either, as evidenced by the CoinDesk 20 Index, which also fell over 2% during the same timeframe. Major altcoins, including solana (SOL), avalanche (AVAX), and AI-focused tokens such as near (NEAR) and render (RNDR), experienced even steeper declines ranging from 4% to 7%.

This pattern of decline in bitcoin and other digital assets around the opening of traditional U.S. markets has been a recurring theme for several weeks, reflecting a growing risk-off sentiment among American investors. Indeed, U.S. stocks began the day on a weak note, with the S&P 500 and the tech-focused Nasdaq 100 down by 1.6% and 1.3%, respectively, by 11 a.m. ET.

Adding to the negative sentiment was a notable rise in the value of the Japanese yen, which traded at 141 to the U.S. dollar today. This marks a significant increase compared to early August, when the yen’s sharp ascent triggered a quick reversal of yen-carry trades. This reversal was a major factor behind a panicky mini-crash observed in both traditional and cryptocurrency markets.