The market experienced a sharp decline of over 5% in a single day, due to the interaction of these key factors:
1️⃣ Collapse of Hopes for Interest Rate Cuts
The latest Consumer Price Index indicated that inflation continues at high levels, prompting investors to abandon their expectations for interest rate cuts, according to CoinMarketCap. This shock negatively impacted high-risk assets like crypto.
2️⃣ Sudden Exodus from Bitcoin ETF Funds
This was manifested by an outflow of approximately $202 million during a single session, particularly from Fidelity funds, which increased selling pressure on BTC and Altcoins.
3️⃣ Massive Liquidation of Leveraged Positions
Within 24 hours, leveraged positions worth over $1.15 billion were liquidated, according to CoinMarketCap. The majority of those positions were long, leading to an additional wave of selling.
4️⃣ New Geopolitical Tension
Fears rose after escalating tensions in the Middle East, especially between Israel and Iran, prompting investors to flee towards safe assets, unlike crypto.
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🔍 Summary:
Not cutting interest rates activates a "tight liquidity" scenario,
Withdrawal of liquidity from ETFs + liquidation of leverage amplifies selling pressure,
Geopolitical spikes increase general fear in the markets.
These sharp corrections are frightening but not out of context, and are often seen as an opportunity for traders with a clear plan.
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#CryptoCrash #MarketCorrection #Bitcoin #ETFOutflows #Fed
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