A crypto market crash accelerated as investors remained concerned about the industry and the ongoing selling pressure from large investors. Bitcoin price dropped below $99,000 for the first time in months. Other tokens like Ethereum, Solana, Chainlink, and Dogecoin fell by over 7%
Crypt Market Crash Triggered by Weak ETF Inflows
One reason behind the ongoing crypto market crash is that demand for exchange-traded funds has waned in the past few weeks. Spot Bitcoin ETFs lost $1.2 billion in assets last week and $796 million the week before.
The same slowdown has happened in Ethereum ETFs, which have shed over $2 billion in assets in the last few months.
Only the recently launched funds like Solana and Hedera have added assets in the past few weeks.
At the same time, large investors have been dumping their tokens recently. In a note, the head of trading at Wintermute said:
“Bitcoin was already under pressure from heavy spot selling and corporate-hedging activity, with traders avoiding alt coins almost entirely.”
READ MORE: XRP Price Did Not Rally After XRPC ETF Launch: Here’s Why
Fear and Greed Index Retreat
Another important reason the crypto market is crashing is that the Fear and Greed Index has slipped, a sign that investors are highly fearful.
It has moved to 25 and is about to move to the extreme fear zone. In most cases, the crypto market crashes when traders become more fearful.
The main reason why fear has taken over is last month’s big liquidations that wiped out millions of users. Liquidations jumped to over $20 billion on October 11, a figure Tom Lee believes is four times that.
Liquidations have remained high in the past few weeks. CoinGlass data shows that they jumped by 23% to $728 million in the last 24 hours.
These numbers explain why the futures open interest in the crypto industry has plunged in the past few weeks. The daily open interest stood at $140 billion today, down sharply from a few months ago.
Federal Reserve Interest Rate Cuts Odds Fall
The other main reason the crypto market is crashing is fear that the Federal Reserve will not cut interest rates in December as previously expected.
The odds of a cut have dropped sharply over the past few days and currently stand at 53%. These odds stood at over 90% a few weeks ago.
The crypto market normally performs well when the Fed is cutting interest rates, and vice versa.
On the positive side, the bank will deliver more cuts next year when Donald Trump nominates Jerome Powell’s replacement. The new Fed Chair will likely advocate for additional cuts, as Stephen Moran has. Moran is the newest Fed member.
READ MORE: Bitcoin Price Prediction: Reasons BTC May Crash Below $90k Soon
