On Monday, early US hours recorded a global market cap drop of more than 2% due to a massive liquidation in the crypto market which plummeted from $3.34 trillion to 3.21 trillion. This resulted in a profit loss of over $130 billion amongst investors.
The prices of Bitcoin (BTC) and Ethereum dipped near major support levels while other altcoins such as XRP, BNB SOL, ADA, and SUI suffered from 3 to 8% declines, leading the market to panic selloff.
Moreover, we also saw a price decline of over 5% for Dogecoin (DOGE) and Shiba Inu (SHIB). The market is currently in a consolidation phase ahead of Donald Trump’s inauguration taking place next week.
Cryptocurrency Market Liquidations Hit $400 Million
Over $400 million worth of cryptocurrency positions have been liquidated in the last 24 hours according to Coinglass which has had an impact on more than 170,000 traders. The largest single liquidation order, at a whopping $8.21 million, came from the Binance exchange for the BTCUSDT pair.
Out of the total long position liquidations, approximately $330 million and $70 million worth of short positions were terminated affecting the market heavily along with Aaron’s other assets, including Ethereum, Dogecoin, Solana, XRP and SUI. Just today, $55 million worth of crypto liquidations occurred within a single hour helping the market reach that point.
Macro Factors Create Market Challenges
After receiving strong employment reports, traders seem to have opted for a more careful approach. The American economy appears to be strong which increases concerns regarding tariffs under President-elect Donald Trump. All these factors make it more reasonable to delay rate cuts within this year.
Large firms on Wall Street such as Barclays, Goldman Sachs, and Bank of America have confirmed that the cuts on Fed rates will take place but later than expected. Funds futures show that traders do not anticipate cuts to be inserted before the end of the year.
The yield on 10 year treasury has reached levels above 4.8% which is the highest since 2023. Additionally, the dollar index has surpassed 110 for the first time within the DXY. These changes have tremendously affected the prices of bitcoin.
The macro headwinds are still underway, and there are PPI, unemployment claims, and Chicago CPI inflation data expected within this week. These forthcoming reports can inflate the crypto market downturn even more
Whales and Institutions Dumping Bitcoin and Ethereum
The price of Bitcoin has now dipped below the significant support level of $92000, while Ethereum ETH has the potential to drop below $3000. The reason behind this decline is primarily the outflows in spot Bitcoin ETFs alongside auctions from whales and institutions.
As per CoinGape, Bitcoin network activity is at its lowest as compared to November 2024. Moreover, the Short Term Holders’ SOPR (Spent Output Profit Ratio) 7-day moving average value has sunk below 1 indicating losses in short-term positions. If Bitcoin does not hold these crucial support thresholds, then there is a risk of crashing to the price range of $80000.
In the past 13 hours, Tron Founder Justin Sun has shifted an estimated $320.4 million value of Ethereum to crypto exchanges HTX, suggesting that Ethereum whales are beginning to sell at a loss.
CoinGape Markets foresees trouble for XRP as well. Subsequent to the breakout from the symmetrical triangle pattern, the outlook, as of now is quite wobbly.
