Why Is the Crypto Market Down Today?
Crypto Longs Liquidation
The sudden collapse in the crypto market on Wednesday has caused concern among investors. The global market cap fell 2.50% to $1.94 trillion as Bitcoin and Ethereum prices slipped below $51,000 and $2,900, respectively. This selloff was triggered by investors trimming their holdings ahead of a liquidity flush.
Bitcoin price experienced a 2% slip from $52,000 to $50,700 within hours, resulting in a 24-hour fall of almost 3%. Top altcoins like ETH, SOL, XRP, ADA, and others also witnessed over 5% retracement in the last few hours.
The liquidation of long positions worth over $217 million today caused a freefall in BTC price. More than 103K traders were liquidated in the last 24 hours, with the largest single liquidation order on Binance’s BTC USDT valued at $9.70 million.
Bitcoin and Ethereum Futures OI Slips
Bitcoin futures open interest (OI) on CME and Binance fell more than 3% and 4% in the last 24 hours. Weak spot Bitcoin ETF inflow and sell signals contributed to this decline. Ethereum futures OI also fell, with a major decline occurring in the last few hours.
Upcoming Options Expiry
A significant amount of BTC and ETH options are set to expire on February 23. This $6 billion expiry exerted selling pressure on the market. Traders may have already closed their positions in anticipation of massive volatility in the coming days.
FOMC Meeting and PCE Data
The release of the FOMC Minutes and cautious statements from Fed officials regarding rate cuts have impacted the market. The Fed’s preferred inflation gauge PCE and jobless claims data are also key events being monitored by traders. Additionally, the US Dollar Index (DXY) continues to move over 104, while US Treasury yields have risen as investors seek fresh economic data.
Hot Take: Brace Yourself for Increased Volatility
As a crypto enthusiast, you should be prepared for increased volatility in the market. The recent collapse in the crypto market, coupled with upcoming options expiry and key economic events, indicates that the next few days may see significant price fluctuations. Stay updated with the latest news and monitor market trends closely to make informed investment decisions.
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