Crypto Market Plummets: Bitcoin and Ethereum Take a Hit?

22.02.2024

The crypto market saw a sudden collapse on Wednesday, raising eyebrows among investors. The broader crypto market selloff caused the global market cap to fall 2.50% to $1.94 trillion. Bitcoin price and Ethereum price slipped below $51,000 and $2,900, respectively, as investors trimmed holdings ahead of liquidity flush.

Why Crypto Market Is Down Today?

Crypto Longs Liquidation

Bitcoin price slips 2% within hours from $52,000 to $5o,700, making a 24-hour fall to almost 3%. Top altcoins ETH, SOL, XRP, ADA, and others also witnessed over 5% retracement in the last few hours.

The crypto market saw $300 million liquidated over 24 hours, with $60 million liquidated in the last few hours. Coinglass data indicate long positions worth over $217 million were liquidated today, February 21. More than 103Ktraders were liquidated in the last 24 hours, with the largest single liquidation order on Binance’s BTCUSDT valued at $9.70 million. This caused a freefall in BTC price, triggering the market to bleed.

Bitcoin and Ethereum Futures OI Slips

Bitcoin futures open interest (OI) on CME and Binance fell more than 3% and 4% in the 24 hours, coupled with a weak spot Bitcoin ETF inflow and sell signals. As per data, Bitcoin futures open interest (OI) on CME fell to $6.62 billion, after a further 1% fall in the last 4 hours.

Ethereum futures open interest (OI) also fell in the last 24 hours, but a major decline happened just in the last few hours. ETH futures OI fell 1% on Binance and 4% on Bybit.

Upcoming Options Expiry

CoinGape reported that 71K BTC options of notional value $3.7 billion are set to expire on February 23. The put-call ratio is 0.76 and max pain point is $47,000.

Moreover, 792K ETH options of notional value $2.3 billion are set to expire, with a put call ratio of 0.46. The max pain point is $2,500.

Thus, a $6 billion in BTC and ETH options expiry exerted some selling pressure. Traders may have looked this early and closed their positions already, with massive volatility expected in coming days.

FOMC Meeting and PCE Data

The FOMC Minutes is set to be released today, but Fed officials have already turned more cautious on rate cuts and expect the first rate cut in the second half of the year. The Fed’s preferred inflation gauge PCE and jobless claims data are other key events traders were watching.

Meanwhile, the US Dollar Index (DXY) continue to move over 104 today. It has continued to hold higher since last few weeks. Moreover, U.S. Treasury yields rose as investors look for fresh economic data due this week that could provide more insights. The US 10-year Treasury yield is 4.257%, making a rebound in the last few days.

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