The digital asset market saw a notable downturn today, with the global crypto market cap falling nearly 3% in the past 24 hours. Major cryptocurrencies like Bitcoin, Ethereum, DOGE, BNB, and LINK have all suffered sharp declines, sparking discussions about the potential causes behind this market selloff.
Key Factors Contributing to the Crypto Market Selloff
Several factors may have triggered today’s crypto market downturn. Let’s explore the main reasons affecting the broader crypto market sentiment.
Bitcoin ETF Outflows Raise Concerns
The U.S. Spot Bitcoin ETF reversed its trend after experiencing inflows for five consecutive days through July 1, recording the highest influx of $129.5 million on that day. This initially boosted market confidence in institutional interest towards Bitcoin. However, the scenario shifted on July 2, with the U.S. Spot Bitcoin ETF reporting an outflow of $13.7 million. Despite inflows of $14.1 million and $5.4 million from BlackRock IBIT and Fidelity’s FBTC, respectively, a $32.4 million outflow from Grayscale tempered the gains. This reversal has impacted investor sentiment, indicating a pause by institutions before further commitments.
Impact of Friday Options Expiry
The Bitcoin ETF outflows have introduced volatility in BTC, potentially influencing the broader crypto market. Additionally, the impending expiration of significant BTC and ETH options has affected investor risk appetite. According to Deribit data, BTC options with a notional value exceeding $1.04 billion and a put/call ratio of 0.80 are set to expire on Friday, July 5, with a maximum pain price of $63,000. Similarly, ETH options worth $479.30 million, with a put/call ratio of 0.38 and a max pain price of $3,450, are also due to expire. These expiries are creating market uncertainty as traders adjust their positions.
Delay in Ethereum ETF Launch
The crypto market was eagerly anticipating the U.S. SEC’s approval of the Spot Ethereum ETF this week. However, a potential delay has sparked investor concerns. Nate Geraci, president of ETF Store, suggested a July 15 launch for the U.S. Spot Ethereum ETF, while Bloomberg hinted at a mid-July launch. This delay has added to the market’s anxiety.
Significant Crypto Liquidation
The recent market selloff resulted in a liquidation of $123.62 million over the last 24 hours, according to CoinGlass data. Approximately 45,000 traders were liquidated during this period, with the largest single liquidation occurring on OKX – ETH-USDT-SWAP, worth $3.36 million. Bitcoin faced $34.74 million in liquidations, while Ethereum saw $32.87 million. Despite this, some analysts remain optimistic about the market’s future performance, particularly with the anticipated Ethereum ETF approval this month, which could lead to significant gains.
However, with Bitcoin’s price hovering around $61,000, risks persist. Popular crypto market expert Ali Martinez warned of potential $1 billion liquidations if BTC hits $62,600.
Current Market Sentiment
As of writing, Ethereum’s price dropped nearly 3% in the last 24 hours, Dogecoin fell by 1.3%, BNB slumped 2.5% to $566.23, and Shiba Inu slipped 1.34% to $0.00001695. CoinGlass data also revealed that Bitcoin Futures Open Interest (OI) fell by about 4% from yesterday, while Ethereum OI declined by approximately 1.4%, highlighting the prevailing negative sentiment in the crypto market.
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