Cryptocurrency markets saw sharp sell-offs over the weekend. Bitcoin briefly climbed above $66,000 today after dipping as low as $62,006 on HTX. Ethereum recovered to around $1,830, Solana to $72, and $XRP to $0.96. Even so, CoinMarketCap data shows weekly losses of approximately 14% for Bitcoin, 18% for Ethereum, 19% for Solana, and 17% for $XRP.
Why Did the Cryptocurrency Market Fall?
The sell-off followed a week of rising expectations for a US interest rate hike, declines in technology stocks, and continued outflows from spot Bitcoin ETFs. US producer inflation rose 0.3% month-on-month in October, reaching 6.5% year-on-year. On Friday, CME FedWatch data showed the market pricing in an approximately 90% probability of a 25 basis point rate hike at the Fed’s December meeting. The Nasdaq fell 0.9% that day. NVIDIA shares also declined 2% following the departure of founder and CEO Jensen Huang.
In the crypto market, spot Bitcoin ETFs have recorded net outflows for seven consecutive trading days. Farside Investors data shows that approximately $1.91 billion flowed out of the funds over that period, including $1.07 billion during last week’s five trading days. When US stock markets reopen on Monday, an early indicator to watch will be whether buyers have returned to the funds after the weekend decline.
93% of Liquidations Were Long Positions
CoinGlass’s 24-hour measurement today shows that approximately $2.06 billion worth of positions were liquidated in the cryptocurrency market. Approximately $1.92 billion of that amount came from long positions and $142 million from short positions. The data shows that more than 329,000 investors experienced liquidations. The largest single transaction was the closure of $16.17 million worth of positions on Binance’s ETH/USDT market.
As Bitcoin fell, leveraged long positions reached their margin limits. Exchanges automatically closed those positions, creating new sell orders in the futures market. The price drop therefore triggered further liquidations, and forced selling accelerated the decline.
What Data Do Analysts Examine When Assessing Selling?
Anchorage Digital research director David Lawant shared a chart today showing that selling pressure is also apparent in the spot market. From November 9-14, sell-trade volume on Coinbase’s major Bitcoin trading pairs exceeded buy-trade volume by approximately 8,900 BTC. Of the four exchanges Lawant compared, Coinbase had the largest gap. In his weekend assessment, Wellington-Altus strategist James E. Thorne attributed the accelerated decline to the closing of leveraged positions. Thorne said Bitcoin would first need to reclaim $73,000 and then move above $87,000 to confirm a bottom formation on the chart. A fall below $57,000 would invalidate this scenario.
Key Hours Ahead for the Fed and NVIDIA
On Monday at 8:00 PM, Federal Reserve Chairman Kevin Warsh will speak at the opening of the San Francisco Federal Reserve’s productivity and employment conference.
NVIDIA’s earnings report is expected around 00:20 on Tuesday night or Wednesday morning. The company’s results meeting will begin at 01:00. Following Jensen Huang’s departure, investors will be watching for comments from interim CEO Colette Kress on chip demand and the upcoming quarter.
The minutes of the Fed’s October meeting will be released on Wednesday at 10:00 PM.
*This is not investment advice.
