Key Points
- The cryptocurrency market experienced a significant slump, with Bitcoin, Ethereum, and other altcoins recording losses.
- Geopolitical tensions in the Middle East and subsequent investor anxiety contributed to the market downturn.
The cryptocurrency market recently experienced a significant decline, with $500M wiped out from both long and short positions. This drastic reduction was primarily driven by escalating geopolitical tensions in the Middle East.
On October 2nd, the total market capitalization fell by more than 5% to $2.25 trillion. Bitcoin [BTC] fell victim to the bearish pressure, dropping to a seven-day low below $61,000. Concurrently, most altcoins also experienced losses. Ethereum [ETH], for instance, dropped by 6.5% to trade at $2,473.
Other Cryptocurrencies Also Affected
Binance Coin [BNB] and Solana [SOL] also saw decreases of 4.9% and 5.7%, respectively. Ripple [XRP] fell below $0.60 after a 3.6% dip. Dogecoin [DOGE] suffered the most significant losses among the top ten largest cryptocurrencies, falling by 9% to trade at $0.108.
These declines were mirrored in traditional financial markets, with Japan’s Nikkei 225 index falling by 2.5%. The cryptocurrency market’s downturn was largely attributed to escalating geopolitical tensions in the Middle East, particularly Iran’s missile attacks on Israel. This event triggered widespread anxiety among traders about the performance of risk assets.
Safe-Haven Assets Gain Traction
In times of uncertainty, investors typically move away from risk assets like cryptocurrencies and towards safe-haven assets. As crypto prices fell, gold experienced minimal losses of less than 1%.
Data reveals that over $500 million was liquidated from the market in the last 24 hours, impacting more than 155,000 traders. Bitcoin and Ethereum experienced the highest liquidations of $140 million and $110 million, respectively. The largest single liquidation occurred on Binance, with one trader losing more than $12 million.
Data also showed that on October 2nd, U.S. spot Bitcoin exchange-traded funds (ETFs) saw $242 million in outflows, the highest level since early September. Fidelity’s Bitcoin ETFs saw the largest outflow of $144 million. Ethereum ETFs also saw $48M in outflows, the highest level in over a week.
This negative data coincided with the Bitcoin Fear and Greed Index dropping to 42, its lowest score in over two weeks, indicating a high level of fear in the market.