The crypto market is going down today, with Bitcoin and most altcoins being in the red. Bitcoin dropped to $81,000, while the market capitalization of all tokens fell by 3.7% in the last 24 hours to $2.7 trillion. Some of the top laggards in the industry were tokens like Raydium (RAY), Zcash (ZEC), Lighter (LIT), and Starknet (STRK). All these altcoins dropped by over 12%.
Crypto market crash triggered by US inflation data
One of the key reasons why the crypto crash is happening today is that the US published strong consumer inflation data on Wednesday. The headline Consumer Price Index (CPI) rose 3.7% in September, moving further away from the Federal Reserve’s target of 2.0%. Core inflation also continued rising during the month.
US inflation is soaring because of the ongoing US-Iran and Saudi Arabia-Houthi wars that have pushed crude oil prices higher. Brent has remained above $100 this week, while the West Texas Intermediate (WTI) rose to $95. Gasoline and diesel prices have remained at an elevated level this month.
The rising inflation impacts crypto prices because of its impact on US bonds. Data shows that the ten-year yield moved to its highest level in decades this month. The five-year and two-year yields have also continued rising.
These numbers mean that the Federal Reserve may decide to hike interest rates this year. Odds that this rate hike will happen by December have jumped to over 80% on Polymarket. Bitcoin and most altcoins tend to underperform the market whenever inflation and interest rates are in an upward trend.
Rising liquidations is impacting crypto prices
Bitcoin and other altcoins are falling because of the ongoing liquidations in the crypto industry. Data shows that 24-hour liquidations jumped by 393% to over $938 million. Ethereum liquidations led the charge with $281 million, while Bitcoin followed with $194 million. Solana, Zcash, Dogecoin, and XRP were among the top liquidated tokens.
Liquidations refers to a situation where brokers are forced to close leveraged trades when prices move to levels where traders don’t have enough cash as collateral. In most cases, this liquidation tends to lead to more selling pressure in the crypto industry.
These liquidations coincided with the falling open interest. The 24-hour open interest dropped by 2.25% to $138 billion, much lower than where it was last year.
Falling demand in the crypto market
The ongoing crypto market weakness is happening because of the ongoing waning demand among investors. Data shows that spot Bitcoin ETFs suffered over $278 million in outflows, while Ethereum funds lost $695 million. Other altcoin ETFs, including Dogecoin, XRP, HYPE, and Zcash have seen limited inflows this month.
This weakness is a sharp contrast to what happened in the last three months, when Bitcoin funds added over $6 billion in assets. Ethereum ETFs also added over $3 billion in this period. As such, there are signs that American investors are capitulating and booking profits.
The post Here’s why the crypto market is going down today (Oct. 15) appeared first on Invezz
