The cryptocurrency market experienced a significant downturn today, with the total market capitalization falling by over 4.30% to approximately $2.50 trillion on June 18. Investors are grappling with the reasons behind this decline and pondering the potential for a market rebound.

Today's crypto market sell-off is part of a broader correction that began over the weekend. Minneapolis Federal Reserve chief Neel Kashkari's comments played a pivotal role in this downturn. During a June 16 telecast on CBS’s *Face the Nation*, Kashkari suggested that the Federal Reserve might implement only one interest rate cut in 2024. He emphasized the need for more evidence to confirm that inflation is on a consistent path back down to 2%.

Kashkari's remarks contrast sharply with bond traders' expectations of at least two rate cuts in 2024, anticipated for September and November. Consequently, the probability of a September rate cut dropped to 55% on June 18 from 66% over the weekend.

This shift in rate cut expectations coincided with a rebound in U.S. Treasury yields. The annual returns on the benchmark 10-year bond (US10Y) rose by 14 basis points since the weekly session opened on June 17. Higher bond yields increase the opportunity cost of holding riskier assets like cryptocurrencies, contributing to the significant market decline observed this week.

Bitcoin ETF Outflows Exacerbate the Decline

The crypto market downturn is further influenced by a de-risking strategy among Bitcoin exchange-traded fund (ETF) traders and investors. U.S.-based spot Bitcoin ETFs saw a 3.65% drop in holdings to around $15.10 billion in the week ending June 14. This trend continued, with $145.90 million in withdrawals on June 17, bringing the net ETF reserves down to $14.956 billion.

These outflows are occurring alongside a rise in the U.S. dollar's strength against a basket of top foreign currencies, as indicated by the U.S. dollar index (DXY). A stronger dollar typically signals a lower risk appetite among investors, explaining the accelerating outflows from Bitcoin ETFs and the resulting market anxiety.

Long Liquidations Impact Market Bulls

The market decline has been further aggravated by a wave of long liquidations overpowering short ones in the past 24 hours. Data from Coinglass reveals that long traders—those betting on a market upswing—faced approximately $403 million in liquidations, compared to $61 million for short traders. Long position liquidations force traders to sell their holdings at a loss, increasing selling pressure and driving the market lower.

Technical Analysis and Future Outlook

From a technical perspective, today's decline is part of a correction within a symmetrical triangle pattern. The market capitalization has dropped 12.34% after testing the triangle's upper trendline as resistance.

Looking ahead, the crypto market valuation might rebound towards the upper trendline after testing the lower trendline as support. This potential rebound could elevate the market cap to around $2.48 trillion by the end of June, representing a 9.5% increase from current levels. Conversely, a breakdown below the lower trendline could lead to a further decline, potentially bringing the market cap down to the 200-day exponential moving average (200-day EMA) at approximately $2.09 trillion.

Investors will be closely monitoring these technical levels and macroeconomic indicators to gauge the market's next moves.