Cryptocurrency markets were in red on Tuesday morning as investors continued to express concerns about the Federal Reserve and geopolitics. Bitcoin prices have plummeted to $63,000, and Solana has fallen from a year-to-date high of $210 to $135.
Monero price is trading at $122, higher than the weekend low of $105.85, while Quant (QNT) has fallen to $103 from Monday's high of $115. Other altcoins such as Hedera Hashgraph, Immutable X, Ethena, Starknet, Jasmy, and VeChain also plunged.
Monero, Jasmy, Quant prices
US dollar index and VIX
A closer look at the broader market shows that the plunge in crypto prices is occurring at a time when investors are becoming very anxious and moving to safe havens.
Data shows that the US Dollar Index (DXY), which weighs the US dollar against other currencies, continues its upward trend. It has risen for the past five days and is trading at its highest level since November last year.
The US dollar soared against most currencies. It appreciated significantly against currencies of developed countries such as the euro, pound, and Japanese yen. Similarly, it soared against emerging market currencies such as the Malaysian ringgit, Chinese yuan, and Philippine peso.
Meanwhile, the VIX index has also been trending parabolically over the past few days. It rose to nearly $20 on Tuesday morning, nearing its highest level since October of last year. The index is up more than 60% from this year's low.
In most periods, the VIX and DXY indexes rise sharply as investors move from riskier assets to safer ones. This also explains why the American stock market is in free fall. On Monday, the Dow Jones index fell 245 points, while the Nasdaq 100 rose 280 points.
Reasons why altcoins are falling
Therefore, there are several reasons why altcoin prices can drop sharply. First, investors are moving from riskier assets to safer assets. This explains why gold prices have soared to all-time highs this year.
Second, there are concerns about Bitcoin forming a triple top pattern ahead of the halving event.. This price action indicates that the coin could fall sharply as investors sell on the halving news. Moreover, they have already pushed BTC from less than $20,000 in 2022 to over $60,000 today.
Third, altcoins are plummeting due to rising geopolitical issues that could lead to higher inflation in the coming months. Data shows that energy and industrial metal prices have been on a strong upward trend in the past few weeks.
Finally, traders are also keeping an eye on the US earnings season. Banks such as JPMorgan, Morgan Stanley, Citigroup and BlackRock all exited the market after recently reporting mixed financial results.
