Markets
Why is the cryptocurrency market down today? Are further sell-offs expected?
The cryptocurrency market lost $140 billion in a single day and continues to parse gains, with the global market capitalization falling from $2.43 trillion to 2.30 trillion dollarsThe two major currencies Bitcoin and Ethereum saw massive sell-offs as investors viewed the launch of the Ethereum spot ETF as “sell the news” eventThe price of ETH has dropped by more than 9% in the past day, triggering a broader market correction.
Furthermore, cryptocurrency liquidations in the cryptocurrency market are expected to continue as traders mainly prepare for options expiration, US PCE inflation releaseAND US Federal Reserve Interest Rate Decision in the next days.
Cryptocurrency Market Liquidations on Ethereum Sell News Event
The debut of the Ethereum spot ETF has received a muted response from spot and derivatives investors. The launch of the Ether ETF has proven to be a sell-the-news event similar to what the industry saw with the Bitcoin spot ETF earlier this year in January.
Spot Ether ETF raised $106.6 million on debut due to massive inflows BlackRock Ethereum ETF. But net inflows dropped to $133.3 million the next day, causing a ETH Sale.
Overall, the cryptocurrency market has seen billions in market value lost in recent liquidations such as BTC Price and the price of ETH dropped by 4% and 9% respectively. Coin glass
the data indicates almost 350 million dollars in cryptocurrency liquidations, with over 81,000 traders liquidated in the last 24 hours. The largest single order liquidation of BTCUSDT valued at $11.78 million
It happened on the cryptocurrency exchange Binance.
Source: Coinglass
Nearly $315 million longs and $35 million shorts were liquidated, with ETH surpassing BTC in liquidations over the past 24 hours. This caused a hemorrhage in the cryptocurrency market, but also provided a buying opportunity on the downside.
Other reasons behind the shift in sentiment included options traders eyeing lower prices at the monthly options expiry, whale sell-offs, Mt. Gox redemptions, and a weak U.S. tech earnings season. Cryptocurrency research firms including QCP Capital AND Search 10x shared a bearish outlook on ETH, with concerns over continued market weakness.
Why the liquidations will continue
Cryptocurrency market to see monthly options expiry on Friday. Bitcoin and Ethereum prices are under selling pressure as traders brace for over $5.5 billion in crypto options expiry on the largest derivatives exchange Deribit.
Above 61,194 BTC options with a notional value of 4 billion dollars are set to expire on Deribit. The put-call ratio is extremely high at 0.60 and the maximum pain point is at $63,000.
Source: Deribit
Also, 143,391 ETH options with a notional value of $1.6 billion to expire, with a put-call ratio of 0.46. The maximum suffering price for Ethereum is $3,400, above the current ETH Price
of $3,166.
Additionally, the PCE inflation data to be released on Friday and the upcoming FOMC meeting with the Fed interest rate decision are key factors that are pushing the cryptocurrency market lower. Traders have become cautious ahead of these key events.
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