Crypto Prices Plunge as Major Banks Warn on US Economy

Crypto prices experienced a significant downturn as investors remained cautious and panic selling intensified. The crypto fear and greed index slipped to 18, reflecting the heightened anxiety in the market. This decline was further exacerbated by warnings issued by major financial institutions, including Citigroup and HSBC, regarding the current state of the US stock market and the broader economy.

Citigroup analysts downgraded US equities, shifting their outlook from neutral to overweight. They noted that the US economy was likely to underperform compared to other global markets in the coming months. This sentiment was echoed by HSBC, which also downgraded US stocks, citing concerns over trade wars and economic uncertainties. HSBC analysts remained moderately bullish on US equities but saw better opportunities in Europe, where the European Central Bank is cutting rates.

These warnings come at a time when US stocks have already erased their year-to-date gains and are hovering near their lowest levels in months. The performance of the US equities market is closely correlated with crypto prices, meaning that a downturn in one often leads to a similar trend in the other. This correlation was evident in the recent performance of major cryptocurrencies like Bitcoin, Shiba Inu, and Dogecoin, which all experienced significant declines.

Bitcoin, the largest cryptocurrency by market capitalization, saw its price drop to a low of $76,500 before rebounding slightly to $82,000. This rebound coincided with a rise in US stock futures, with the Nasdaq 100 and S&P 500 indices both showing gains. However, the technical outlook for Bitcoin remains bearish, with a death cross pattern looming. This pattern, which occurs when the 50-day moving average crosses below the 200-day moving average, is often seen as a strong bearish signal.

Shiba Inu, another popular cryptocurrency, crashed to a low of $0.00001078, down by 68% from its highest level in 2024. This decline marked a notable low point for the cryptocurrency, coinciding with its lowest swing in August of the previous year. Despite this, there are signs of potential recovery, with the formation of a double bottom and a falling wedge pattern, both of which are typically bullish indicators.

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