Here’s Why the Crypto Market Is Crashing for Weeks as Bitcoin Price Plunges

Crypto Market Correction: Whale Activity and Investment Flows Show Caution

The peak of the recent bull run occurred in mid-December, with a total market cap exceeding $3.7 trillion and Bitcoin reaching an all-time high of over $107,000. However, the market has since experienced a correction, with Bitcoin prices currently below $94,000 and the total market cap below $3.25 trillion.

Whale Activity and Investment Flows

Recent data suggests a significant decrease in large Bitcoin transactions, with a 51.64% drop from 33,450 to 16,180 over the past month. This decline in whale activity signals a potential withdrawal of large holders from the market.

Additionally, capital inflows into the cryptocurrency market have plummeted by 56.70% from $134 billion to $58 billion. This sharp decline indicates hesitation among investors to commit further capital to crypto assets.

Trading Volume and Market Sentiment

Santiment has reported a notable drop in crypto trading volume, describing the current situation as "trading paralysis." Major projects across various sectors haven't experienced such low trading levels since November 4th. This lack of market excitement points to a period of fear, uncertainty, and doubt (FUD) among traders.

Political Transitions and Market Uncertainty

The upcoming change in political leadership may contribute to the cautious sentiment. Large investors appear to be waiting for clarity on the potential impact on the crypto markets.

Market Outlook

While low activity periods can increase the probability of market rebounds, the combination of reduced whale activity and lower trading volumes suggests a period of continued market uncertainty.

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