Saha Swatilakha
In a swift turn of events, the cryptocurrency market experienced a significant selloff this week, resulting in over $100 billion in asset liquidation. The market’s total capitalization plummeted from $2.55 trillion earlier in the week to $2.43 trillion today. This sharp decline was primarily triggered by Bitcoin losing its upward momentum, inciting panic selling among investors bracing for a heavy macroeconomic week ahead.
Bitcoin’s price dropped by 4% over the past 24 hours, sinking from a 24-hour high of $70,195 to a low of $67,325, reflecting low buying interest in both spot and derivatives markets. As of the time of writing, Bitcoin has shown some recovery, trading at $69,490 according to CoinMarketCap.
Ethereum, the second-largest cryptocurrency by market cap, mirrored Bitcoin’s trajectory with a 4% drop in the past 24 hours. It is currently trading at $3,617. The broader crypto market, including other altcoins, also experienced significant declines in response to the leading cryptocurrencies’ slump.
The cryptocurrency market’s volatility is largely attributed to traders’ anticipation of several critical economic decisions. Investors are anxiously awaiting the Consumer Price Index (CPI) inflation data, as well as rate hike decisions from both the U.S. Federal Reserve (FED) and the Bank of Japan (BOJ) this week. The apprehension surrounding these announcements has led to a widespread selloff in the crypto market, with options and futures traders offloading assets to drive prices lower.
The recent market turmoil resulted in the liquidation of over $170 billion in market value from top cryptocurrencies. More than 66,000 traders were liquidated in the last 24 hours alone. Long positions worth nearly $145 million and short positions totaling $25 million were wiped out, with Bitcoin and Ethereum alone accounting for over $80 million in liquidations. This widespread liquidation has caused substantial market bleeding but also presented a potential buy-the-dip opportunity for some investors.
Further compounding the market’s woes, data from Farside revealed that Bitcoin ETFs experienced a significant outflow of $64.9 million on Monday. This marked the first outflow since early May, ending a streak of continuous inflows. The outflow highlights a growing concern among crypto traders, paralleling the apprehension seen in traditional stock markets, that the Federal Reserve may not ease interest rates this year.
As the Federal Reserve kicked off its two-day policy meeting, investors are on edge, speculating on the central bank’s next move. The decision, expected today, is poised to have far-reaching implications for both the cryptocurrency and traditional financial markets. As traders and investors brace for critical economic decisions, the crypto market remains in a state of flux, showing little recovery, but with potential for further turbulence ahead.
