Why The Crypto Market Is Down: Key Factors Explained

Why The Crypto Market Is Down: What’s Behind the Market Sell-Off?

Cryptocurrency Market Takes a Major Dip, Triggered by Liquidations

The cryptocurrency market faced a significant downturn on Friday as traders appeared to reduce their long positions following recent spikes. In the last 24 hours, over 90,456 traders experienced liquidations, amounting to approximately $276.84 million in losses. The largest single liquidation happened on Binance, where a BTC/USDT order valued at $11.3 million was cleared.

Bitcoin Hits a Peak, then Drops Amidst Market Downturn

Bitcoin has been on a roller-coaster lately, spiking up to a high of $73,544 within just three days. However, it soon corrected itself, dropping to around $70,614. A major factor behind this price fall is the sharp decline in the US stock market, which saw a staggering $950 billion wiped out on October 31.

Bitcoin ETFs See Cash Outflows, Affecting Price Momentum

Bitcoin's price momentum appeared to wane as top U.S. spot BTC ETFs reported significant outflows. While BlackRock's IBIT ETF managed an inflow of about $318 million, other major spot BTC ETFs, including ARKB, Fidelity's FBTC, and Bitwise BITB, recorded outflows of $94 million, $75 million, and $75 million, respectively.

Altogether, spot BTC ETFs in the U.S. registered a modest net cash inflow of $32 million, a stark contrast to the nearly $2 billion inflow from earlier in the week.

Bitcoin Reacts to $2 Billion Options Expiry

Bitcoin’s price volatility has also been influenced by the expiration of $2 billion in options contracts on Friday, although this figure is smaller than last month. According to Coinglass, the options trading volume on Deribit exchange alone reached approximately $1.96 billion within the last 24 hours.

Earlier this week, CME Bitcoin options reported a spike in volume, likely in anticipation of the upcoming U.S. election. Meanwhile, open interest (OI) surged to $1.3 billion on Deribit, with a notable strike price of $80,000.

Market Uncertainty Amid High-Impact Events 

Despite Bitcoin’s recent steady growth driven by institutional demand, short-term uncertainties have tempered investor confidence. Notably, anticipated high-impact events have sparked increased profit-taking, contributing to a less bullish market outlook.

Market watchers expect heightened volatility in the coming weeks, especially with the approaching U.S. elections where Republican candidate Donald Trump is favored by some to win. Additionally, Wall Street anticipates that the Federal Reserve may introduce another rate cut next week, adding to the market’s volatility.