Crypto Crash Today: Why Bitcoin and Altcoins are Going Down

The crypto crash today accelerated, with Bitcoin and most altcoins falling by double digits. The Bitcoin price plunged by 7% over the last 24 hours to $103,500. In contrast, Ethereum and top altcoins like Binance Coin (BNB), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) are plunging by over 10%.

Crypto Crash Today Triggered by Soaring Liquidations

One main reason for the ongoing crypto crash today is that liquidations have surged in the past few weeks.

Liquidations surged to over $19 billion last Friday. It’s significantly higher than those that occurred during previous periods of strain, such as the Terra Luna and FTX collapses in 2022.

The liquidations jumped by 112% today to $1.12 billion. Bitcoin liquidations surged to $430 million over the last 24 hours, while Ethereum liquidations reached $266 million.

Other highly liquidated tokens were Solana, XRP, HYPE, and Dogecoin. Over 300,000 traders were liquidated today. It’s a figure that is much higher in reality, as CoinGlass data does not capture all the numbers in the crypto industry.

In a recent statement to CNBC, Tom Lee noted that last Friday’s liquidations were four times higher than the real ones.

Crypto liquidations occur when exchanges are compelled to close trades due to mounting losses, triggering a margin call. Therefore, many people who are liquidated will stay out of the market for a while. They come to terms with their losses.

Rising Crypto ETF Outflows

The ongoing crypto crash is happening amid the fading demand from institutional investors. One metric that demonstrates this is the ongoing happenings in the ETF industry.

Data shows that spot Bitcoin ETFs experienced outflows of $536 million on Thursday. It surpassed the $104 million they spent on Wednesday. These funds have had $864 million in outflows this week, a significant reversal from inflows of $2.71 billion and $3.24 billion, respectively.

Ethereum ETFs also experienced substantial outflows on Thursday, with $60 million being shed. These funds have shed over $80 million this week as some investors sold their holdings.

The other notable sign of fading institutional demand is that companies are no longer launching crypto treasuries. Some, like Semler Scientific and MetaPlanet, have stopped buying Bitcoin altogether as their NAV multiples have plunged below 1.

Falling Fear and Greed Index

Meanwhile, there are signs that crypto investors are being fearful. This is demonstrated by the Crypto Fear and Greed Index, which has tumbled to the fear zone of 26.

The Crypto Fear and Greed Index is a crucial indicator for the market. It utilizes metrics such as momentum, price action, derivative data, and other proprietary factors.

It is common for cryptocurrencies to drop when they move into the fear zone, as this leads to panic selling among investors. It then rallies when it is in the greed zone, as this leads typically to Fear of Missing Out (FOMO) among investors.

Notably, the broader Fear and Greed Index, tracked by CNN, has moved into the extreme fear zone, at 23.

Correlation With the Stock Market

The crypto crash is also happening as part of the ongoing stock market plunge. Futures data indicate that the Dow Jones, S&P 500, and Nasdaq declined by 0.55%, 0.80%, and 1.0%, respectively.

They are dropping for the second consecutive day as concerns about the regional banking industry rose. These concerns arose after Zions Bank and Western Alliance declined by over 10% on Thursday. The announcement of fraud-related losses followed it.

The stock and crypto markets are often correlated because they are seen as risky assets. In contrast, the gold price has continued to rise as concerns about trade relations between the US and China persist.

Additionally, it has soared as it has become a haven asset during the ongoing US government shutdown.