Why is the Crypto Market Down?

The crypto market is down today, with Bitcoin and most altcoins accelerating their plunge. Bitcoin price tumbled to $81,300, down 35% from its highest level this year. Other top crypto tokens, including blue-chip names like Ethereum, Solana, and Chainlink, were also down.

Crypto Market Down After Encouraging US Jobs Data

The cryptocurrency market crash intensified on Thursday as the Bureau of Labor Statistics (BLS) published the September jobs report.

This report showed that the labor market performed relatively well in September, before the government shutdown began. Non-farm payrolls increased by 119k in October, a big turnaround from the 4k job losses in the previous month. The report was better than the median estimate of 50k.

Additionally, wage growth continued, with the average hourly earnings growing by 3.8% YoY. It is higher than the median estimate of 3.7%. The only blemish in the report was the unemployment rate, which rose to 4.4% during the month.

The strong jobs report pushed some investors to predict that the Federal Reserve may not cut interest rates in the December meeting. However, the report did not include the potential job losses that occurred during the government shutdown.

The crypto market crash also intensified after the Federal Reserve published minutes of the last meeting on Wednesday. These minutes revealed that officials were highly divided on whether to cut rates in that last meeting, with hawks pointing to inflation numbers.

Concerns about the Federal Reserve escalated after some officials, like Michael Barr and Beth Hammack, warned against more cuts, noting that inflation had remained above the 2% target for over four years.

Rotation from Risky Assets as VIX Jumped

The crypto market is down as investors moved from risky assets, and the Fear and Greed Index plunged. Data compiled by CNN shows that the Fear and Greed Index has dropped to the extreme fear zone of 7. Similarly, the Crypto Fear and Greed Index has plunged to 11.

At the same time, the CBOE Volatility Index (VIX) jumped to $26.5, its highest level since October 17. In most cases, investors rush out of risky assets when the VIX is rising and the Fear and Greed Index is falling.

This explains why the stock market crashed on Thursday despite strong Nvidia earnings. The blue-chip Dow Jones, Nasdaq 100, and S&P 500 indices dropped by over 1% on Thursday.

Bitcoin and Ethereum ETF Outflows

The crypto market crash also happened as demand for top coins among American investors dropped. Data compiled by SoSoValue shows that spot Bitcoin ETFs shed over $903 million in assets on Thursday, bringing the weekly outflows to $1.45 billion.

Similarly, spot Ethereum ETFs shed over $261 million in assets, bringing the weekly outflows to over $555 million. The ongoing ETF outflows are a sign that there is no demand from American investors and that many of their holders are dumping the tokens.

Crypto Liquidations are Still Elevated

Meanwhile, thousands of crypto investors are being liquidated, putting more pressure on Bitcoin and other coins.

Data compiled by CoinGlass shows that crypto liquidations jumped by over 220% in the last 24 hours to over $2 billion.

Bitcoin bullish positions worth over $1.02 billion were liquidated as the coin moved below key support levels. Ethereum and Solana positions worth over $428 million and $104 million were liquidated in the last 24 hours.

Analysts believe that the real figure is usually much higher than the one displayed by CoinGlass. Soaring liquidations put tokens under more pressure over time.

Crypto Going Down Because of Weak Technicals

Technicals have contributed to the ongoing crypto market crash. For example, the Bitcoin price has formed a death cross pattern and a series of lower lows and lower highs. It led to panic selling among traders.

Technicals suggest that the coin has more downside in the near term. The Average Directional Index (ADX) has jumped to 42, its highest level this year. It’s a sign that the momentum behind the recent bearish trend is strengthening. A strong Bitcoin price crash has triggered more downside among other tokens.