In the past few hours since the close of U.S. markets on Tuesday, the cryptocurrency market has experienced a significant downturn. According to CoinMarketCap, Bitcoin (BTC) plummeted by 6%, Ethereum (ETH) dropped by 9%, and Solana (SOL) decreased by 7% within the last 24 hours.

The abrupt sell-off began just after 5 PM Eastern Time. Ethereum saw a decline from the upper $2,500 range to the mid-$2,400s, while Solana fell from above $154 to approximately $147. Additionally, data from CoinGlass indicates that levered futures positions worth $205 million were liquidated in the past four hours, bringing total liquidations to over $300 million in the last 24 hours—a peak not seen since August 4.

The sudden drop in crypto prices didn’t have an obvious catalyst, though technical factors could have played a significant role, especially for Bitcoin. Bitcoin’s sharp decline was triggered when its price fell below the critical 50-day moving average (50DMA). Throughout most of August, the 50DMA served as a crucial resistance level and was flipped to support during last Friday’s rally, which saw BTC surge to around $65,000. However, that support level has now vanished, along with an uptrend from mid-month lows. Chart analysis indicates a possible near-term test of the $56,000 level for Bitcoin.

Looking ahead, Tuesday’s sharp decline in crypto prices might be short-lived if Nvidia’s earnings report on Wednesday surpasses expectations. Nvidia, a global leader in technology and a key player in the AI boom, has significantly contributed to the bullish trend in U.S. equities over the past year. This bullish momentum has spilled over into the correlated crypto market. Therefore, strong earnings from Nvidia could act as a major positive force for leading cryptocurrencies, potentially preventing Bitcoin from staying below $60,000 for long.

Additionally, the upcoming release of U.S. Core PCE inflation data later this week could bolster market sentiment. This data is expected to reinforce the Federal Reserve’s confidence in implementing a series of interest rate cuts in the coming quarters. Such cuts would align with the Fed’s recent dovish shift in language and guidance. The anticipated easing of liquidity conditions is expected to be another significant tailwind for crypto prices in the years ahead.