Why Is Crypto Crashing Today? $362 Billion Wiped Out

Over the weekend, the cryptocurrency market faced a sharp decline, wiping out $362 billion from its total market capitalization, now at $3.17 trillion. The downturn, driven by increased volatility, liquidations, institutional moves, and profit-taking, affected all the top ten cryptocurrencies by market cap.

Liquidations Hit Hard, Especially for Long Traders

Bitcoin (BTC) experienced sharp price swings, moving between $93,700 and $98,600 in just 24 hours. Other major coins, like Ether (ETH) and Solana (SOL), also took a hit, falling 4.2% and 8.9%, respectively. 

Massive liquidations added to the market’s troubles, with $692 million erased in just one day. Long traders using leverage were the hardest hit, suffering $578.5 million in losses.

The single largest liquidation happened on Binance, where a $4.67 million BTC/USDT trade was liquidated. This triggered more traders to close positions, further dragging prices down.

Institutional Activity Shakes the Market

Institutional actions also fueled the decline. Expiring Bitcoin and Ethereum options worth $9.4 billion and $1.3 billion, respectively, led traders to adjust their positions.

Bitcoin ETFs saw a net outflow of $438 million. BlackRock’s IBIT ETF recorded a $267 million inflow, showing some optimism, but Bitwise BTC ETF’s $280 million outflow highlighted divided sentiment.

Profit-Taking Adds Pressure

Profit-taking emerged as a key factor behind the sell-off. Over 74,000 BTC were transferred to exchanges in three days as traders capitalized on recent gains. Of this, 19,238 BTC were deposited over the weekend, increasing selling pressure and accelerating price declines.

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Market Still Bullish, but Caution Looms

Despite the drop, market sentiment remains relatively strong. The Crypto Fear & Greed Index, which hit an all-time high of 94 when Bitcoin approached $99,000, has now dropped to 79, staying in the “Extreme Greed” zone, though it has dropped from a recent high. 

While this shows that many traders remain optimistic, it also suggests a sense of caution, as the market may be preparing for a correction.

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