The crypto market experienced a sharp correction, plunging the global crypto market cap by more than 8% to a low of $2.38 trillion. Overall, the crypto market suffered a market value loss of over $250 billion due to the recent sell-off.
Bitcoin price fell from $70,978 to $65,254 for a variety of reasons, including options expiry, historical Bitcoin halving patterns, macroeconomic factors, and technical chart weakness. Bitcoin triggered a sell-off in the crypto market, with the price of Ethereum plunging by 12%. This caused altcoins SOL, XRP, ADA, DOGE, SHIB and others to fall by 15-30%. Meme coins are among the most liquidated cryptocurrencies in the last 24 hours.
The crypto market selloff began due to options expiration and was extended by other factors
In fact, the crypto market began to show signs of weakness ahead of the US CPI data earlier this week. Bitcoin price's rise to $72,000 was a fluctuating move in response to increasing Bitcoin ETF inflows and demand for long positions due to FOMO related to the Bitcoin halving, as reported by CoinGape.
Experts such as Benjamin Cowen, Peter Brandt, and Arthur Hayes predicted a decline, possibly a market crash, if BTC price repeats a similar chart pattern seen in previous Bitcoin halving events and most recently in the listing of Bitcoin ETFs. Cowen predicted that BTC price could fall below $60,000 after the halving.
CoinGape also predicted a decline in BTC and ETH prices after the options expire. The sell-off in the crypto market began with options expiry at 12:00 UTC, as can be clearly seen in the chart above. The reasons for this were lower maximum pain points than trading prices, dominant sell trades in the derivatives market on low volumes and subdued sentiment following the hotter consumer price index.
BTC price broke key support levels at $70,400 and $68,200, further extending the sell-off due to geopolitical tensions in the Middle East and negative sentiment following earnings reports from major banks. Shares of JPMorgan Chase fell 6.47% on Friday.
The global macroeconomic events caused US dollar index (DXY) climbs above 106, its highest level since early November, and the 10-year US Treasury yield jumped to a 6-month high of 4.585%. As Bitcoin moves in contrast to DXY and Treasury yields, a rise in both has caused Bitcoin price to fall to $65,000, triggering a crypto market crash.
Crypto price correction is not over yet
Coin jar Data shows that more than $950 million was liquidated in the crypto market in the wake of this sharp correction. Of these, $830 million in long positions and nearly $120 million in short positions were liquidated in the last 24 hours.
Over 297,000 traders were liquidated and the largest single liquidation order occurred on crypto exchange OKX when someone exchanged $7.19 million worth of ETH for USD.
QCP Capital remains structurally optimistic but expects deleveraging declines could be profound, particularly given the extent of the bull market this year. This suggests that traders looking to hedge against short-term downside risks need to consider the BTC price at the May 31st expiration date.
Markus ThielenCEO of 10x Research says Bitcoin miners could sell $5 billion worth of Bitcoin after halving, with whales leading the selloff.
BTC price is currently at $67,211 and will continue to face sell-off pressure if the price stays below support and fails to cross the 20x moving average. At the time of writing, ETH price is at $3,252.
Also Read: GBTC Outflows Surge to Over $16 Billion, Contradicting CEO’s “Equilibrium” Comment
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