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Major Cryptocurrency Sell-Off Hits Markets
The cryptocurrency market experienced a significant downturn this week, with Bitcoin (BTC) falling to $87,000 and XRP dropping 4.4% as political uncertainty in the United States rattled investors. The sell-off comes ahead of a critical Federal Reserve interest rate decision and amid growing fears of a potential government shutdown.
Political Tensions Trigger Market Panic
According to market analysis, the probability of a partial US government shutdown has surged to 76% on prediction platform Polymarket, up dramatically from just 8% earlier this month. This follows political tensions after Senate Leader Chuck Schumer indicated his party would block a major spending package if Homeland Security funding isn't removed.
'Historically, government shutdowns create selling pressure on Bitcoin, followed by recovery once stability returns,' noted cryptocurrency analyst Michael van de Poppe. 'The market hates uncertainty, and right now we have plenty of it.'
Technical Patterns Signal Further Decline
Technical analysis reveals concerning patterns for both major cryptocurrencies. Bitcoin has formed a rising wedge and bearish pennant pattern, moving below the Supertrend indicator and 50-week EMA. This suggests potential decline to $80,000 levels. XRP has formed a double-top pattern with a neckline at $1.62, risking a breakdown to October lows of $1.355.
The broader market followed suit, with Ethereum (ETH) falling toward $2,840, while Solana, Cardano, and other altcoins saw losses of 3-5%. In total, $224 million in long positions were liquidated in 24 hours, including $68 million in BTC futures and $45 million in ETH contracts, according to data from CoinGlass.
Trump's Trade Threats Add to Market Woes
Adding to market concerns, former President Donald Trump threatened 100% tariffs on all Canadian goods if Canada strikes a trade deal with China. 'This could severely impact North American energy and auto industries,' warned economic analyst Sarah Johnson. 'Since these comments came over the weekend when markets were closed, we're expecting sharp reactions when trading resumes.'
Federal Reserve Decision Looms Large
This week's Federal Reserve meeting represents another critical moment for cryptocurrency markets. According to CoinDesk analysis, the Fed is expected to maintain interest rates unchanged at 3.5%-3.75%, with markets pricing in a 96% chance of a pause after three consecutive rate cuts.
'The real market-moving event will be Fed Chair Jerome Powell's press conference,' explained financial strategist David Chen. 'A dovish stance could boost Bitcoin and risk assets, while hawkish signals might strengthen the dollar and pressure cryptocurrencies.'
Big Tech Earnings Could Determine Direction
Investors are also watching quarterly results from major technology companies including Microsoft, Meta, Tesla, and Apple. As Bitcoin increasingly behaves like a risk asset, its performance often correlates with tech stocks. The outcome of these earnings reports could introduce additional volatility to cryptocurrency markets.
The current situation highlights how traditional economic and political factors increasingly influence cryptocurrency valuations. As Bitcoin and XRP continue to mature as assets, their sensitivity to macroeconomic events grows, creating both challenges and opportunities for investors navigating this evolving landscape.
