Crypto Sell-Off: Bitcoin Drops Below $92K, Solana Plunges 14%

The cryptocurrency market experienced a significant sell-off on Tuesday, with major coins plunging as much as 14% in the past 24 hours. The downturn extended from Monday's sell-off, reflecting a generally bearish sentiment and the absence of catalysts to support the market.

Solana's SOL token led the decline, falling 14% and extending its 7-day losses to over 20%. Dogecoin (DOGE), XRP (XRP), and Ether (ETH) also dropped more than 8%. Bitcoin (BTC) lost the $92,000 level for the first time since late November, threatening a potential downside break of the multi-week consolidation between $90,000 and $110,000.

Overall market capitalization fell 6.6%, while the broad-based CoinDesk 20 (CD20) index, which tracks the largest tokens, dropped more than 7%. Traders attributed the current bearish sentiment to overblown concerns and emphasized the importance of macroeconomic decisions in supporting market growth.

Jeff Mei, COO at crypto exchange BTSE, noted that Bitcoin, Ethereum, and Solana should not be trading this far below their all-time highs. He suggested that inflation concerns and a pause in Fed rate cuts have kept markets down, but weak economic data could prompt Fed officials to take further action.

Augustine Fan, head of insights at SignalPlus, echoed the sentiment, stating that the "slowdown" narrative would likely dominate the near-term narrative, with stocks and bonds trading back in positive tandem. He explained that "bad data is now good," as markets refocus their attention on Fed eases, providing tailwinds to both gold and BTC in the near future.

Data released earlier this month showed that the widely-watched Consumer Price Index (CPI) surged 0.5% month-over-month in January, much more than the expected 0.3% gain. This sent investors to prefer cash positions or risk-off bets until clear signs of government intervention to boost the economy.

The U.S. CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Changes in CPI readings tend to impact Bitcoin and the broader crypto market, as investors view the asset class as a hedge against