In a dramatic turn of events, cryptocurrency prices have plunged significantly in the last few hours following the close of US markets on Tuesday. Leading the downturn, Bitcoin (BTC) saw a sharp decline of 6%, Ethereum (ETH) dropped 9%, and Solana (SOL) fell by 7% within the last 24 hours, according to CoinMarketCap.

The abrupt sell-off began just after 5 PM Eastern Time, catching many investors off guard. Ethereum, for instance, plummeted from the high $2,500 range to settle in the mid-$2,400s. Similarly, Solana tumbled from above $154 to its current level near $147.

CoinGlass data reveals that leveraged futures positions worth a staggering $205 million were liquidated in just the past 4 hours. Over the past 24 hours, total liquidations exceeded $300 million, marking the highest level since August 4.

There appears to be no clear catalyst behind this sudden drop in crypto prices. However, technical factors may have played a significant role, particularly for Bitcoin. The notable decline in Bitcoin’s price occurred after it fell below its 50-Day Moving Average (50DMA), a critical resistance level throughout most of August. This level had flipped to support during last Friday’s rally that propelled BTC to highs of $65,000. But this support has now vanished, along with an uptrend from mid-August lows. Chart analysis suggests that a near-term test of $56,000 is within the realm of possibility.

Tuesday’s steep decline in crypto prices might be short-lived if Nvidia’s earnings report, due on Wednesday, exceeds expectations. Nvidia, one of the world’s largest companies, is at the forefront of the AI revolution. Their robust earnings performance over the past year has been a major driver of the US equity bull market. This bullish sentiment has naturally spilled over into the correlated cryptocurrency space. Therefore, strong earnings from Nvidia could act as a significant tailwind for major cryptocurrencies, potentially pushing Bitcoin back above $60,000.

Additionally, US Core PCE inflation data scheduled for release later in the week could further bolster market sentiment. This data is expected to reinforce the Federal Reserve’s confidence in implementing a series of rate cuts over the next few quarters. Such a scenario would support the recent dovish shift in the Fed’s language and guidance.

Easing liquidity conditions are anticipated to be another major tailwind for cryptocurrency prices in the coming years. The combination of favorable macroeconomic data and strong corporate earnings could create an environment conducive to sustained growth in the crypto market.