The crypto market has lost $140 billion in just a day and continues to pare gains, with the global market cap down from $2.43 trillion to $2.30 trillion. The two major currencies Bitcoin and Ethereum saw massive selloffs as investors considered the spot Ethereum ETF launch a “sell the news” event. ETH price tumbled more than 9% over the last day, triggering a broader market correction.
Moreover, the crypto liquidations across the crypto market are anticipated to continue as traders brace primarily for options expiry, US PCE inflation release, and U.S. Federal Reserve interest rate decision in days ahead.
Crypto Market Liquidations on Ethereum Sell the News Event
The spot Ethereum ETF debut received a muted response from spot and derivatives investors. The Ether ETF launch turned out to be a sell-the-news event similar to what the industry saw in the case of spot Bitcoin ETF earlier this year in January.
The spot Ether ETF witnessed $106.6 million on debut due to a massive inflow in BlackRock Ethereum ETF. But, the net inflow dropped to $133.3 million the next day itself, causing an ETH selloff.
Overall the crypto market saw billions in market value lost in the recent liquidations as BTC price and ETH price fell 4% and 9%, respectively. Coinglass data indicates nearly $350 million in crypto liquidations, with over 81K traders liquidated in the last 24 hours. The largest single liquidation order of BTCUSDT valued at $11.78 million happened on crypto exchange Binance.
Nearly $315 million longs and $35 million shorts were liquidated, with ETH surpassing BTC in liquidations in the last 24 hours. This caused the crypto market to bleed, but it also offered a buy-the-dip opportunity.
Other reasons behind the shift in sentiment were options traders targeting lower prices amid monthly options expiry, selling by whales, Mt. Gox repayments, and weak US tech earnings season. Crypto research firms including QCP Capital and 10x Research shared a bearish outlook on ETH, with concerns over continuing weakness in the market.
Why Liquidations Will Continue
Crypto market to see monthly options expiry on Friday. Bitcoin and Ethereum prices are trading under selling pressure as traders brace for more than $5.5 billion in crypto options expiry on the largest derivatives exchange Deribit.
Over 61,194 BTC options with a notional value of $4 billion are set to expire on Deribit. The put-call ratio is extremely high at 0.60 and max pain point is at $63,000.
Also, 143,391 ETH options with a notional value of $1.6 billion to expire, with a put-call ratio of 0.46. The max pain price for Ethereum is at $3,400, above the current ETH price of $3,166.
Moreover, the PCE inflation data set to be released on Friday and the upcoming FOMC meeting featuring the Fed interest rate decision are key factors driving the crypto market lower. Traders have turned cautious ahead of these key events.
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