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In summary
- The Cryptocurrency market crashed, causing the price of Bitcoin to drop more than 5% on Tuesday night, resulting in massive liquidations totaling $526 million in 24 hours.
- Long positions represented $453 million and short positions $73 million, according to data from CoinGlass.
- Bitcoin was trading down 3.5% at $61,720 on Wednesday morning, while Ethereum (ETH) fell more than 6% to $2,480, according to data from CoinGecko.
The cryptocurrency market crashed, causing the price of Bitcoin to drop more than 5% on Tuesday night. This resulted in massive liquidations totaling $526 million in 24 hours.
Long positions represented $453 million and short positions $73 million, according to data from CoinGlass.
At the time of writing, Bitcoin is trading down 3.5% at $61,720 on Wednesday morning, while Ethereum (ETH) fell more than 6% to $2,480, according to data from CoinGecko.
Notably, analysts have been saying that the setback, while painful, is temporary—not the harbinger of a prolonged bear market. In the coming months, Bitcoin could benefit from Chinese stimulus, US employment numbers, clarification on FTX payments to creditors, and the end of the US election season.
“Markets don’t like uncertainty, and for an emerging industry like crypto, the uncertainty of the November election will be a burden,” Samir Kerbage, chief investment officer at Hashdex, told Decrypt earlier today.
The sharp sell-off came after the Israel Defense Forces (IDF) reported that more than 100 missiles were launched at Israel from Iran, setting off sirens in major cities including Tel Aviv and Jerusalem, according to Sky News. The incident marks a severe escalation in regional tensions. Military analyst Alistair Bunkall told the news outlet that this attack is “much larger” than previous incidents, such as those in April.
The geopolitical turmoil was followed by substantial withdrawals of funds from Bitcoin ETFs and Ethereum ETFs. On October 1, spot Bitcoin ETFs recorded a total net outflow of $243 million, the first outflow after eight consecutive days of net inflows, according to data from SoSo Value.
The Fidelity ETF (FBTC) saw a significant outflow of $144 million, while the ARKB reported $84.3 million in net outflows. The BlackRock ETF (IBIT) saw an inflow of $40.8 million, but it was not enough to counter the overall negative trend. Ethereum ETFs also faced similar pressure, with net outflows totaling $48.5 million. Grayscale (ETHE) and Fidelity (FETH) ETFs lost $26.6 million and $24.9 million, respectively, according to data from SoSo Value.
The market crash also hit cryptocurrency-related stocks, with Bitcoin miners bearing the brunt of the sell-off.
Marathon Digital (MARA) saw its shares fall as much as 9%, while CleanSpark (CLSK) fell almost 6%. Core Scientific (CORZ) and Riot Platforms (RIOT) both fell about 4%. Even Coinbase, the top US cryptocurrency exchange, saw an 8% decline in its stock price.
Providing context to the market movements, Avinash Shekhar, co-founder and CEO of Pi42, said that based on historical trends, it will be late October when Bitcoin will show bullish momentum with new highs.
“Fed Chairman Jerome Powell’s statement on the US economy and commitment to lower interest rates ‘over time’ has certainly driven confidence back into the market. Minor corrections are expected in the market. “Altcoins, particularly ETH, will show growth,” he said in a note sent to Decrypt.
Presto Research stated that last night’s BTC price action (BTC -4% vs. gold +0.8%) following Iran’s attack on Israel may be disconcerting, especially considering BlackRock’s recent recommendation for BTC as a similar safe haven asset. to gold.
The research firm argued that Bitcoin’s short 15-year history places it in the early stages of widespread adoption, resulting in a risk profile more akin to that of an internet startup. “This dual characteristic makes BTC a mix of a risk and safe haven asset,” they added.
Edited by Stacy Elliott.
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