Crypto market saw a sharp correction, plunging the global crypto market cap by more than 8% to a low of $2.38 trillion. Overall the crypto market saw over $250 billion in market value lost in the recent selloff.
Bitcoin price tumbled to $65,254o from $70,978 due to various reasons including options expiry, historical Bitcoin halving patterns, macroeconomic factors, and technical chart weakness. Bitcoin triggered a selloff in the crypto market, with Ethereum price plunging 12%. This caused altcoins SOL, XRP, ADA, DOGE, SHIB, and others to fall 15-30%. Meme coins are among the most liquidated cryptocurrencies in the last 24 hours.
Crypto Market Selloff Started by Options Expiry and Extended by Other Factors
The crypto market actually started showing signs of weakness ahead of U.S. CPI data earlier this week. Bitcoin price rise to $72k was a range-bound movement in response to rising Bitcoin ETF inflow and demand for long positions due to FOMO surrounding Bitcoin halving, as reported by CoinGape.
Experts such as Benjamin Cowen, Peter Brandt, and Arthur Hayes predicted a downfall, possibly a market crash, if BTC price repeats a similar chart pattern seen during previous Bitcoin halving events and most recently spot Bitcoin ETFs listing. Cowen predicted BTC price could drop below $60,000 after the halving.
CoinGape also predicted a drop in BTC and ETH prices after options expiry. The crypto market selloff started with options expiry at 12 PM UTC, as clearly shown in the above chart. The reasons were lower max pain points than the trading prices, dominant sell trades in the derivatives market amid low volumes, and subdued sentiment after the hotter CPI.
BTC price broke key support levels at $70,400 and $68,200 and further extended the selloff due to geopolitical tensions in the Middle East and negative sentiment after earnings reports from major banks. JPMorgan Chase shares fell 6.47% on Friday.
The global macroeconomic events caused US dollar index (DXY) to climb above 106, the highest level since early November, and the US 10-year Treasury yield jumped to a 6-month high of 4.585%. As Bitcoin moves opposite to DXY and Treasury yields, a rise in both has caused a downfall in Bitcoin price to $65k, triggering a crypto market crash.
Crypto Price Correction Not Over Yet
Coinglass data shows more than $950 million were liquidated across the crypto market amid this strong correction. Of these, $830 million long positions were liquidated and nearly $120 million short positions were liquidated in the last 24 hours.
Over 297K traders were liquidated and the largest single liquidation order happened on crypto exchange OKX as someone swapped ETH to USD valued at $7.19 million.
QCP Capital remains structurally bullish but believes deleveraging dips can go deep, particularly due to the extent of the bull run this year. It suggests that traders looking to hedge short-term downside must consider BTC price at the May 31 expiry.
Markus Thielen, CEO of 10x Research, says Bitcoin miners could sell $5 billion in Bitcoin after the halving event, with whales leading the selloff.
BTC price currently trades at $67,211 and continues to remain under selloff pressure if price stays below support and fails to cross above the 20-simple moving average. ETH price trades at $3,252 at the time of writing.
Also Read: GBTC Outflows Surge Past $16 Billion, Defies CEO’s ‘Equilibrium’ Comment
