Crypto Market Down Today: Who’s the Real Culprit?

The crypto market is currently experiencing a sharp downturn, with Bitcoin, Ethereum, and other major cryptocurrencies plummeting in value. The industry has seen a notable loss of 3.21%, reaching $3.6 trillion, resulting in more than $450 million in liquidations within just 24 hours.

As the market continues to fluctuate, it's essential to examine the factors driving the decline and what it might mean for the future of space.

Crypto Market Down Today: A Closer Look

The global digital asset industry is once again in the red zone, sparking investor caution. After a paradoxically bearish “Uptober,” the market is preparing for an uncertain “Pumpcember." The current market crash could be attributed to a combination of factors, including the ongoing US shutdown, Fed Chair’s hawkish tone, ETF outflows, and millions in liquidation.

US Government Sh utdo wn

Notably, the US government shutdown has now entered its second month with no resolution in sight. The crypto space has also been directly affected by the uncertainty regarding important economic data points due to the shutdown. Overall, the economy is experiencing strain, with 22 US states facing economic contraction. This downturn is disproportionately impacting lower- and middle-income households, who are struggling to make ends meet. This broader downturn is also seen in the digital asset industry, which continues to slide.

No Possible Rate Cuts, Hints the Federal Chair

Fed Chair Jerome Powell recently stoked fears when his hawkish rhetoric on monetary policy resulted in a market downturn. Despite a 25-basis-point rate reduction, Powell's remarks suggested a more cautious approach to interest rates, contributing to significant volatility. He noted,

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

Bitcoin ETF Outflow

Bitcoin ETFs are under significant pressure, with continued heavy outflows adding to the market's woes. According to recent data from Fairside, U.S. spot Bitcoin ETFs saw $1.15 billion in withdrawals last week alone. The largest outflows were also recorded across funds managed by large firms like BlackRock, ARK Invest, and Fidelity, demonstrating that investors are reluctantly pulling back from financial products underpinning Bitcoin.

Crypto Liquidations

Over the past 24 hours, about $472 million in assets were wiped off across major exchanges, including Binance, Bybit, Hyperliquid etc. While $413 million in long positions were liquidated, only $59M in short positions got liquidated. Over the past 12 hours, $366 million was wiped off, with $335m in long and $31m in short positions.