The crypto market is in chaos, is it facing a collapse?
The total cryptocurrency market capitalization has fallen about 4% in the past 24 hours, hovering around $2.42 trillion on Thursday. Bitcoin (BTC) and Ethereum prices led the decline, causing altcoins to follow suit, with significant liquidations.
The latest data shows that the price of Ethereum is down about 8% and is currently trading around $3,174. Bitcoin price continues its pullback, testing the 50-day moving average around $64,000.
As a result, the crypto derivatives market suffered nearly $300 million in liquidations, mostly concentrated on long traders.
The main reasons why cryptocurrencies are falling today:
Ethereum ETF outflows and market pessimism
The U.S. spot Ethereum ETF experienced a net outflow of approximately US$133 million, led by Grayscale’s ETHE, and the decline is not over yet. The Ethereum ETF has performed poorly in the past two days, further exacerbating the market's pessimism.
Stock market turmoil affects global sentiment
In the past 24 hours, approximately $1.1 trillion has been wiped off the market value of the U.S. stock market, which is almost equivalent to the entire market value of Bitcoin. Although the crypto market is not strongly correlated with traditional financial markets, this massive liquidation triggered a ripple effect in global financial markets.
FOMC uncertainty
The upcoming Federal Open Market Committee (FOMC) statement adds to market uncertainty, triggering medium-term volatility.
Bitcoin’s Fear and Greed Index has dropped to 68%, indicating growing concerns that the cryptocurrency may continue to decline. Partly triggered by Mt. Gox repaying its debt to creditors, more than $2 billion was transferred to Bit exchanges in the past 24 hours.
