The cryptocurrency market sell off, which saw the Bitcoin price nose-dive by over 5% late Tuesday, resulted in massive liquidations totaling $526 million over 24 hours.
Long positions accounted for $453 million and short positions for $73 million, according to data from CoinGlass.
At the time of writing, Bitcoin is trading down 3.5% at $61,720 early Wednesday, while Ethereum (ETH) fell over 6% to $2,480, according to CoinGecko data.
It's worth noting that analysts have been saying the setback, however painful, is temporary—not the harbinger of a prolonged bear market. In the coming months, Bitcoin stands to see a boon from China's stimulus, U.S. employment figures, clarify on FTX payments to creditors, and an end to the U.S. election season.
“Markets don’t like uncertainty, and for an emerging industry like crypto, the uncertainty of the November elections will be an overhang,” Samir Kerbage, chief investment officer at Hashdex, told Decrypt earlier today.
Bitcoin Stares Down Several Tailwinds as Global Stimulus, US Election, and FTX Payouts Loom
Bitcoin is gearing up for a potential rally in the closing months of this year, with several developments lining up to provide a much-needed market boost, analysts say. Despite a 4% decline on Tuesday following Iran’s missile strike on Israel, Bitcoin has since rebounded from two-week lows, climbing above $61,500 after dropping to as low as $60,300. The decline came after Iran launched more than 180 ballistic missiles at Israel in retaliation for Israeli strikes on Hezbollah positions in Lebanon...
The sharp sell-off came after The Israel Defense Forces (IDF) reported that over 100 missiles were launched into Israel from Iran, setting off sirens in major cities, including Tel Aviv and Jerusalem, according to Sky News. The incident marks a severe escalation in regional tensions. Military analyst Alistair Bunkall told the media outlet this attack is "far bigger" than previous incidents, such as those in April.
The geopolitical turmoil was followed by substantial fund withdrawals from Bitcoin and Ethereum spot ETFs. On October 1, Bitcoin spot ETFs recorded a total net outflow of $243 million, the first outflow after eight consecutive days of net inflows, according to data from SoSo Value.
Fidelity's (FBTC) ETF saw a significant outflow of $144 million, while ARKB reported $84.3 million in net outflows. BlackRock's ETF (IBIT) registered an inflow of $40.8 million, but it was insufficient to offset the overall negative trend. Ethereum spot ETFs also faced similar pressure, with net outflows amounting to $48.5 million. Grayscale's (ETHE) and Fidelity's (FETH) lost $26.6 million and $24.9 million, respectively, data shows.
Bitcoin Price Drops Sharply as 'Uptober' Begins With Mass Liquidations and Middle East Tensions
The Bitcoin price dropped sharply Tuesday morning at the beginning of a month historically expected to bring in gains for traders. The price of the largest digital asset now stands at $62,798, CoinGecko shows, after dropping as low as $62,633. In a 24-hour period, it's down nearly 2%. U.S. equities also experienced a sharp sell-off and the price of oil rose after the White House said it was expecting Iran to attack Israel. Tensions in the Middle East have previously caused sell-offs of "risk-on"...
The market downturn also affected crypto-related stocks, with Bitcoin miners bearing the brunt of the sell-off.
Marathon Digital (MARA) saw its shares plummet by up to 9%, while CleanSpark (CLSK) fell nearly 6%. Core Scientific (CORZ) and Riot Platforms (RIOT) both dropped by about 4%. Coinbase, the leading U.S. cryptocurrency exchange, experienced an 8% decline in its share price.
Providing context to the market movements, Avinash Shekhar, Co-founder and CEO of Pi42 said according to historical trends, it will be late October when Bitcoin will show bullish momentum with new highs.
“Fed Chair Jerome Powell's statement about the U.S. economy and commitment toward lower interest rates 'over time' have certainly boosted confidence back into the market. Minor corrections are in the offing in the market. Altcoins, particularly ETH will show growth,” he said in a note sent to Decrypt.
Presto Research stated that last night's BTC price action (BTC -4% vs. gold +0.8%) in the aftermath of Iran's attack on Israel may be puzzling, especially considering BlackRock's recent pitch for BTC as a risk-off asset similar to gold.
The research firm argued that Bitcoin's short 15-year history places it in the early stages of mainstream adoption, resulting in a risk profile more akin to an internet start-up. "This dual characteristic makes BTC a blend of a risk-on and risk-off asset," they added.
Edited by Stacy Elliott.
