The global crypto market experienced a sudden selloff, with the market cap falling over 6% to $1.63 trillion. Top cryptocurrencies like Bitcoin, Ethereum, Solana, XRP, and Cardano all dropped more than 6% within just an hour. Bitcoin’s price fell by 7%, dipping below the $41,000 level and erasing its gains since New Year’s Day. Ethereum also saw an 8% decrease, hitting a low of $2,113.
Within the past 24 hours, there has been over $600 million in liquidation, with $500 million of that occurring within just one hour. Coinglass data shows massive long liquidations totaling over $561 million on January 3. In addition, more than 176,000 traders were liquidated during this time period, with the largest single order on Huobi’s BTCUSDT worth $14.26 million.
CME Bitcoin futures open interest reached a new record high of $5.69 billion due to hype surrounding the approval of spot Bitcoin ETFs and FOMO after the increase in BTC price. The previous record was set in October 2021 when BTC was trading above $60,000. However, BTC’s price subsequently fell below $40,000 in the following months.
The total Bitcoin futures open interest on all exchanges decreased by 9% to $18.17 billion from $20.23 billion. Within the last four hours, BTC open interest fell by 6% on CME and 16% on Binance. Additionally, BTC options data suggests that puts have been increasing over the past 24 hours, indicating a selloff by options traders.
Matrixport has made a bold prediction about Bitcoin’s price and the SEC’s decision on Bitcoin Spot ETFs. According to their report, it is expected that the U.S. Securities and Exchange Commission will reject all Bitcoin spot ETFs in January, potentially causing a significant decline in Bitcoin’s value to as low as $36,000.
The U.S. Dollar Index (DXY) has risen by 0.29% to surpass 102.50. This increase follows a previous low of 100.99 last week. Furthermore, U.S. Treasury yields have also risen, with the 10-year Treasury yield jumping to 3.973% in the past few days.
These macro factors, such as the strength of the US dollar and rising Treasury yields, are contributing to the challenges faced by Bitcoin’s upward momentum.
Hot Take: Crypto Market Selloff Amidst Macro Factors
The recent crypto market selloff, with significant drops in major cryptocurrencies like Bitcoin and Ethereum, can be attributed to both market-specific factors and broader macroeconomic influences. The sudden liquidation and decline in prices indicate a shift in sentiment among traders and investors.
Additionally, the rise in the U.S. Dollar Index and Treasury yields adds further pressure on the crypto market, as these factors attract traditional investors seeking higher returns and stability.
While it is essential to monitor market developments and macro trends, it is equally crucial to make informed decisions based on your risk tolerance and investment goals. The volatility of the crypto market requires careful consideration and risk management strategies to navigate successfully.
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