Leading cryptocurrencies nosedived, on Tuesday, as the latest economic data poured cold water on interest rate-cut expectations.

What Happened: Bitcoin fell to $96,200 late afternoon before dip-buying propelled the leading cryptocurrency up a few notches. This comes a day after it hit $100,000 after a gap of more than two weeks.

Ethereum's decline was steeper as the second-largest cryptocurrency lost nearly 8% of its value in 24 hours, plunging to $3,880.

Cryptocurrency liquidations hit $559 million in the last 24 hours, the highest since Dec. 20. More than $500 million in long liquidations was witnessed.

Top traders on Binance seemed to be buying the dip, as over 63% of them were long on Bitcoin, compared to 36% shorting the cryptocurrency. 

About $555 million in short positions risked liquidation if Bitcoin rebounds to $100,000. 

The slump cooled the sentiment from "Extreme Greed" to "Greed," according to the Crypto Fear & Greed Index.

Top Losers (24-Hours)

The global cryptocurrency market capitalization slumped 5.29% to $3.39 trillion in the last 24 hours.

Stocks faced heavy sell-offs on Tuesday. The Dow Jones Industrial Average lost 178.20 points, or 0.42%, to close at 42,528.36. The tech-heavy Nasdaq Composite slipped 1.89%, ending at 19,489.68, while the S&P 500 fell 1.11% to 5,909.03.

The decline followed a report revealing stronger-than-expected U.S. services sector growth, but a steep increase in the Prices Index stoked fears about inflationary pressures.

According to the CME FedWatch tool, traders priced in a 95% chance that the current interest rate range of 4.25%-4.50% would remain unchanged, up from 91% the day before.

While the equities sold off, yields on risk-free debt rose. The benchmark Treasury yield hit 4.69, its highest since late April.

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Analyst Notes: Popular cryptocurrency analyst Michaël van de Poppe weighed in on Bitcoin's latest correction.

"Couldn’t hold above $98-100,000 and we’re dropping down. Likely this is going to give a period of consolidation," the analyst predicted.

However, he added that once the correction ends, the entire market will rally, with altcoins witnessing the "strongest bounces."

Ali Martinez, a widely followed cryptocurrency expert,  highlighted the significance of $97,000 as support for Bitcoin.

"If this support holds, BTC may rebound. A break below $97,000, however, could open the door for a dip to $92,000," Martinez projected.

Photo by CMP_NZ on Shutterstock

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