The cryptocurrency market experienced a significant drop today, with the total market capitalization down 2.93% to $3.21 trillion. In contrast, trading volume surged 39.75% to $144.4 billion, indicating a wave of panic selling or forced exits in the market. Amid this volatility, outflows from cryptocurrency ETFs reached as high as $267.1 million. Surprisingly, the Fear and Greed Index remained relatively stable at 46, indicating that despite the market's violent reaction, sentiment remains neutral.
Why did the cryptocurrency market crash today?
The following catalysts triggered a domino effect of sell-offs in major tokens.
Political and social sentiment: The public debate between Donald Trump and Elon Musk over policy bills further shook market confidence, sparking discussions and confusion on social media.
Large-scale liquidation events: High-leverage positions across various assets face forced liquidation, intensifying the downward momentum.
Macroeconomic headwinds: Investors are anxious about the non-farm payroll data and unemployment rate to be released later today by the U.S. Bureau of Labor Statistics. This data could have a significant impact on Federal Reserve policy, triggering a cautious sentiment.
Cryptocurrency liquidation amount reaches $1 billion
In the past 24 hours, the liquidation amount in the cryptocurrency market exceeded $1 billion, most of which were long positions valued at over $900 million. The liquidation amount for short positions was about $100 million, which clearly reflects how a bull trap caught over-leveraged buyers off guard. Bitcoin alone accounted for $341.76 million in liquidations, followed by Ethereum with a liquidation amount of $285.99 million.
Top exchanges, such as Bybit with $352 million in positions and Binance with $248 million in positions, lead in liquidated positions, with over 89% being long positions. Such a significant drop not only exacerbated the sell-off but also indicated increasing tension among traders, especially those relying on leveraged gains.
What will happen next?
Despite today's decline, the neutral score of the Fear and Greed Index indicates that the market has not yet fallen into full panic. From the chart, the total market capitalization of cryptocurrencies has dropped from over $3.3 trillion to $3.17 trillion, signaling a breach of key support levels. The 9-day moving average of $3.23 trillion currently acts as a resistance level. If the market cannot quickly recover this level, it may further drop towards $3 trillion.
