Markets
Why is the cryptocurrency market down today, with more selling to come?
The cryptocurrency market lost $140 billion in a single day and continues to trim its gains as the global market capitalization fell from $2.43 trillion to $2.30 trillionBoth major currencies Bitcoin and Ethereum saw massive selloffs as investors eyed the launch of an Ethereum spot ETF. “Sell the News” eventThe price of ETH has fallen by more than 9% over the past day, triggering a broader market correction.
Additionally, cryptocurrency liquidations in the cryptocurrency market are expected to continue as traders primarily prepare for expiration of options, US PCE inflation index releasedAnd US Federal Reserve Interest Rate Decision in the coming days.
Cryptocurrency Market Liquidations on Ethereum Sell the News Event
The debut of the Ethereum spot ETF received a mixed response from both spot and derivatives investors. The launch of the Ether ETF turned out to be a news-selling event similar to what the industry saw in the case of the Bitcoin spot ETF earlier this year in January.
The spot Ether ETF recorded $106.6 million in its debut due to a massive inflow of BlackRock Ethereum ETF. But, the net inflow fell to $133.3 million the very next day, causing a Massive ETH sale.
Overall, the cryptocurrency market has seen billions of dollars in market value lost in recent liquidations. BTC Price and the price of ETH fell by 4% and 9% respectively. Coin glass
data indicates close to $350 million in cryptocurrency liquidations, with over 81,000 traders liquidated in the last 24 hours. The largest single liquidation order of BTCUSDT valued at $11.78 million
It happened on the crypto exchange Binance.
Source: Coinglass
Nearly $315 million in long positions and $35 million in short positions were liquidated as ETH surpassed BTC in liquidations over the past 24 hours. This caused the cryptocurrency market to hemorrhage but also provided a buying opportunity on the dip.
Other reasons for the change in sentiment were options traders targeting lower prices amid monthly options expiry, whale selling, Mt. Gox redemptions and the weak U.S. tech earnings season. Cryptocurrency research firms including QCP Capital And 10x Search shared a bearish outlook on ETH, with concerns about continued market weakness.
Why liquidations will continue
The cryptocurrency market is set to see its monthly options expiration on Friday. Bitcoin and Ethereum prices are trading under selling pressure as traders prepare for the expiration of over $5.5 billion worth of crypto options on the largest derivatives exchange Derivative.
On 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 will expire, with a put-call ratio of 0.46. The maximum price of pain for Ethereum is $3,400, above the current price ETH Price
of $3,166.
Additionally, the PCE inflation data due out on Friday and the upcoming FOMC meeting where the Fed will make its interest rate decision are key factors pushing the cryptocurrency market lower. Traders have become cautious ahead of these key events.
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