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Over the weekend, the cryptocurrency market faced a sharp decline, with all the top ten largest cryptocurrencies by market cap trading lower. Meanwhile, the total market cap dropped by $362 billion, now sitting at $3.17 trillion. This downturn was driven by a surge in volatility and several other factors that shook the market.
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.
The real trouble came from liquidations, with over $692 million wiped out in just one day. Long traders, especially those using leverage, were hit the hardest, with $578.5 million in liquidations.
However, the largest single liquidation order happened on Binance, where the BTC/USDT pair saw a liquidation of $4.67M, pushing prices further down as traders were forced to close their positions.
Expiring Derivatives Add Pressure
Institutional actions were another major factor contributing to the market drop. A significant amount of Bitcoin options, worth $9.4 billion, and Ethereum options, worth $1.3 billion, were due to expire, causing traders to adjust their positions.
Additionally, Bitcoin ETFs experienced a net outflow of $438 million, further highlighting the contrasting market views. BlackRock’s IBIT saw a $267 million inflow, while Bitwise BTC experienced a $280 million outflow.
Profit-Taking Added to Decline
Another key element driving the downtrend was profit-taking. Over the past three days, more than 74,000 BTC were moved to exchanges, indicating that traders were cashing out after recent gains. Around 19,238 BTC were deposited over the weekend, adding to selling pressure and fueling the price decline.
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.