The recent crypto crash continued this week, with Bitcoin and Ethereum falling below key support levels. Bitcoin price fell to $90,000, while Ethereum briefly moved below $3,000. Altogether, the valuation of the crypto market has dived to $3.1 trillion from over $4.2 trillion earlier this month.
Crypto Crash Continues as Liquidations Jump
One of the main reasons why the crypto market crash is happening is that exchanges have continued to close loss-making positions in the past few days.
Positions worth over $817 million were liquidated in the last 24 hours, with Bitcoin leading the way with over $411 million. Ethereum positions worth $147 million were also liquidated.
Liquidations in the crypto market have remained elevated over the past few weeks, leading to panic selling among investors.
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Crypto Market Crashes Ahead of Nvidia Earnings
The other main reason the crypto market is crashing is that investors are anticipating Nvidia’s earnings, which will be released on Wednesday this week. This anticipation explains why the stock market dropped by over 1%.
Nvidia’s results are the most important because of its role in the artificial intelligence industry, where it is the largest GPU provider. As such, signs that the industry is slowing will lead to more downside in the stock and crypto markets.
On the other hand, strong results and guidance will mean that the AI bubble is not about to burst, which will most likely boost the market.
Federal Reserve Interest Rates Concerns
Meanwhile, the crypto market crash is also driven by ongoing concerns about the Federal Reserve’s interest rate cuts.
Data compiled by Polymarket shows that the odds of a Federal Reserve rate cut have dropped to below 50% from a year-to-date high of 90%.
Cryptocurrency prices tend to rise when the Federal Reserve is cutting rates or signaling that it will soon slash them.
Crypto Crashing as ETF Outflows Continue
Meanwhile, American investors have continued to sell their exchange-traded funds (ETFs). The most recent data show that the Ethereum ETF outflow this month is worth over $1.2 billion. This is notable, as these funds had received inflows in the previous 7 consecutive months.
The same is happening in the Bitcoin market, where ETF outflows worth over $2.3 billion have occurred this month. These outflows have brought the cumulative figure from almost $65 billion to $58 billion today.
There are other reasons why the crypto crash is happening. The Crypto Fear and Greed Index has tumbled to the extreme fear zone of 17. Also, the sell-off is part of a shakeout that happens to shed weak traders from the market.
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