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The cryptocurrency market is down again. Bitcoin has dropped below the key support level of $105,000. This is its first dip below that mark since October 16.
Most altcoins have plunged, with the market capitalization of all tokens falling to $3.48 trillion. Here are some reasons why is crypto down today.
Why is Crypto Down today Amid Bitcoin and Ethereum ETF Outflows
American investors are pulling back from Bitcoin and Ethereum ETFs. This shift reflects a growing risk-off sentiment. It’s one of the key reasons the crypto market is down today.
SoSoValue reported that spot Bitcoin ETFs lost over $186 million in assets on Monday. This marked the fourth straight day of declines.
These funds have shed over $1.3 billion in assets during the last four trading days. This longest losing streak since early April helps explain why crypto is down today.
Spot Ethereum ETFs have also continued to shed assets in the past few weeks. They recorded a net outflow of $135 million on Monday, the fourth consecutive day of losses. As a result, these funds have all shed over $498 million in assets in this period.
Spot Ethereum and Bitcoin ETFs now have cumulative inflows of over $14.2 billion and $61 billion, respectively. This is a sign that investors are being cautious about the industry.
Crypto Market Crash Amid the Ongoing Liquidations Surge
The other reason for the crypto market’s crash is that exchanges have intensified their liquidations over the past few weeks. A liquidation occurs when an exchange closes a leveraged trade because its losses exceed the margin call threshold.
A trader can prevent such a liquidation by adding more cash to their positions and hoping that the freefall will end. Liquidations are always painful and, at times, can push many traders to give up and exit trading altogether.
In October, the industry faced a $20 billion wipeout. This event affected over 1.6 million traders, explaining why is crypto down today.
Liquidations jumped by over 165% in the last 24 hours to over $1.32 billion, with over 331k traders being affected. While most of the liquidated positions are small, some are big ones, with one trader suffering a $47 million loss.
Bitcoin suffered its largest liquidation, worth over $380 million. Ethereum’s $348 million followed this. Solana had over $152 million in liquidations.
Deleveraging as Open Interest Crashes
The crypto market is experiencing a decline as investors continue to deleverage, with liquidations on the rise. This is happening as traders become aware of the risks associated with being highly leveraged.
CoinGlass data shows that the futures open interest dropped by 7.5% in the last hours to over $143 billion. This represents a significant decline, as the daily futures open interest was over $300 billion a month ago.
Additional data also indicates that the volume in the crypto industry remains under pressure. It’s a sign that investors are remaining on the sidelines.
Crypto Fear and Greed Index Falling
The cryptocurrency market is experiencing a decline as the Crypto Fear and Greed Index drops. Data by CoinMarketCap shows that the index has fallen to the fear zone of 27 today. It’s much lower than the year-to-date high of 88.
The Fear and Greed Index is a crucial gauge that looks at key metrics to determine the sentiment among investors. In most cases, traders buy cryptocurrencies when there is a sense of greed in the market. This situation leads to the phenomenon known as the Fear of Missing Out (FOMO).
More Reasons Why Crypto Is Down Today
There are other key reasons why is crypto down today. For example, these tokens are falling as the US Dollar Index (DXY) jumps. That’s a sign that investors have embraced a risk-off sentiment.
Also, there are concerns that the Federal Reserve will not cut interest rates in the near term. That is because some Fed officials are concerned about inflation.
