The cryptocurrency market experienced a sharp, broad-based sell-off, with total market capitalization falling over 5% to around $2.82 trillion. The downturn was triggered by Bitcoin breaking below the $85,000 support level, which ignited a cascade of forced liquidations in the derivatives market. Data shows over $1.7 billion in leveraged positions were liquidated within 24 hours, with the majority stemming from highly leveraged long positions (20x to 100x).
This liquidation wave accelerated price declines across major cryptocurrencies. Bitcoin fell below $83,000, while Ethereum dropped under $2,800. Altcoins like Solana, Cardano (ADA), and XRP saw losses between 5% and 7%, with some pairs dropping 8% to 15% rapidly. The market-wide nature of the decline, absent any project-specific bad news, points to excessive leverage as the primary driver.
The sell-off was not isolated to crypto. Traditional markets also corrected, with US equity futures and tech stocks slipping. Precious metals saw dramatic declines, with gold dropping over 8% and silver falling sharply, erasing weeks of gains. This synchronized move indicates a broad risk-off sentiment among global investors, exacerbated by rising geopolitical tensions in the Middle East and a cautious Federal Reserve holding interest rates steady with no near-term cut signals.
Compounding the pressure, spot Bitcoin and Ethereum ETFs recorded net outflows during the sell-off, removing a key source of institutional buying demand that could have absorbed the selling pressure from liquidations. The overall market sentiment has slid deeper into "Fear" territory.
