The cryptocurrency market experienced a significant downturn on January 22, resulting in a crypto market selloff. Over $100 million was liquidated in the last 24 hours due to waning investor risk appetite. Several factors contributed to this market retreat, including profit-booking maneuvers by investors, speculations about future market performance, and the impact of the recently approved Spot Bitcoin ETF.
Potential Factors & Market Trends
According to CoinGlass data, the crypto market witnessed an unprecedented liquidation of $107.25 million in the past 24 hours, affecting approximately 55,000 traders. Ethereum led individual crypto liquidations with $22.94 million, followed closely by Bitcoin and Solana.
Binance topped the list of exchanges with $52.62 million in liquidation, followed by OKX and Bybit. However, Bitcoin futures Open Interest data shows a surge in total BTC Futures open interest over the last 24 hours.
Market pundits attribute the dip to profit-booking opportunities and traders assessing market conditions ahead of key economic data releases and the Federal Reserve’s gathering next week. Ongoing legal challenges in the crypto space also add to investor concerns.
Market Dips Amid ETF-Led Volatility
The global crypto market witnessed a slump of 3.16% to $1.59 trillion, with overall trading volume rising 34.50% to $42.49 billion. Major cryptocurrencies like Bitcoin, Ethereum, Solana, BNB, and XRP have seen substantial declines.
Bitcoin price plunged 2.63% to $40,677.05 while Ethereum price was down 4% to $2,380.04. Other cryptos like Solana and XRP also experienced significant slumps.
The recent slump is attributed to Grayscale selling Bitcoins, and crypto analyst Chris J Terry suggests a continuation of a flat or downward trend until the completion of the estimated $25 billion liquidation of Grayscale Bitcoin Trust (GBTC).
Grayscale CEO Michael Sonnenshein disputes the notion that high GBTC fees are driving substantial liquidations, while Galaxy Digital CEO Mike Novogratz predicts investors will shift to other ETFs.
Hot Take: Crypto Market Selloff and Future Expectations
The crypto market selloff has raised concerns among investors, with various factors contributing to the downturn. Profit-booking, speculations about market performance, and the impact of the Spot Bitcoin ETF have all played a role. As the market awaits key economic data releases and the Federal Reserve’s gathering, there is uncertainty about future moves.
However, despite the current slump, some analysts believe that the market may stabilize once the liquidation of Grayscale Bitcoin Trust (GBTC) is completed. The actions of Grayscale and other ETFs will continue to influence market volatility in the coming weeks. It remains to be seen how these factors will shape the future trajectory of the cryptocurrency market.
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