The cryptocurrency market experienced a significant sell-off on Tuesday, with leading digital assets such as Bitcoin, Ethereum, and Dogecoin joining equities in the decline.

This downturn was largely attributed to recent economic data that dampened expectations for interest rate cuts.

Bitcoin fell to approximately $96,200 before a slight recovery, while Ethereum and Dogecoin also saw drops in their values.

The overall market capitalization for cryptocurrencies plummeted by 5.29%, settling at $3.39 trillion.

The sell-off was exacerbated by a report indicating stronger-than-expected growth in the U.S. services sector and concerns about inflation.

This economic backdrop led to a shift in market sentiment, as traders began to price in a 95% likelihood that the current interest rate range would remain unchanged.

As equities faced heavy losses, the benchmark Treasury yield climbed to its highest level since late April.

The cryptocurrency market witnessed substantial liquidations, totaling $559 million within a 24-hour period, the highest since December 20.

Despite the downturn, a majority of top traders on Binance appeared to be buying the dip, with over 63% taking long positions on Bitcoin.

The Crypto Fear & Greed Index reflected this shift in sentiment, moving from "Extreme Greed" to "Greed."

Analysts noted that approximately $555 million in short positions could face liquidation if Bitcoin rebounds to the $100,000 threshold.

As Bitcoin's price fluctuated, the significance of the $97,000 support level became a focal point for traders.

Cryptocurrency expert Ali Martinez emphasized that if this support holds, Bitcoin may experience a rebound.

However, a break below this level could open the door for a further decline to around $92,000.

The sell-off in digital assets mirrored trends in traditional equities, highlighting the interconnectedness of the cryptocurrency market with traditional financial markets.

The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 all faced declines.

Traders and analysts will continue to closely monitor key support levels and market sentiment indicators as the market reacts to economic data and interest rate expectations.

The potential for a rebound in cryptocurrencies remains contingent on broader economic conditions and the ability of digital assets to regain lost ground.