Cryptocurrency markets started the week in the red, with traders liquidating more than $470 million in just 24 hours. Major coins such as Bitcoin, Ethereum, and Solana plunged as investors became cautious in the face of major U.S. economic indicators and growing recession fears.
Bitcoin and Ethereum lead the decline
Bitcoin fell 2.43% to $107,785, extending its three-week battle to break above the key resistance level at $113,000. Ethereum also fell 4.25% to $3,732 as enthusiasm around the ETH exchange-traded fund (ETF) cooled. The pain spread across the altcoin market, with Solana (SOL) down 6.5% to $174, BNB down 5.7% to $1,029, and XRP down 5% to $2.38.
This significant drop wiped out more than $100 billion in cryptocurrency market capitalization, a daily decline of 3.2%.
What triggered the sale?
Traders panicked after Treasury Secretary Scott Bessent warned that the Federal Reserve’s high interest rates may already be pushing parts of the economy, particularly housing, into recession territory. His comments fueled concerns that tighter financial conditions could dampen demand for riskier assets like cryptocurrencies.
Adding to the unrest was the Mexican currency controversy, which stoked fear among traders. Multiple users accused the platform of freezing withdrawals, sparking rumors of bankruptcy. MEXC subsequently issued a proof of reserves (PoR) report confirming sufficient asset backing, but the scare reignited concerns about trust in centralized exchanges.
This economic downturn comes ahead of Friday’s U.S. jobs report and could have a major impact on expectations for a Fed rate cut, and thus on crypto sentiment.
Bitcoin ETF faces massive outflows
Investor caution is also visible in traditional markets. According to Fairside, a whopping $1.15 billion was lost from the U.S. Spot Bitcoin ETF last week. The biggest withdrawals came from BlackRock, ARK Invest, and Fidelity, suggesting that even institutional investors are reducing their exposure to Bitcoin-related products amid market uncertainty.
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Mass liquidation and what lies ahead
Approximately $470 million in crypto positions were liquidated in one day, with Ethereum ($112 million) leading the liquidation, followed by Bitcoin and Solana, according to data from CoinGlass. Centralized exchanges such as Binance and Bybit accounted for most of these losses, but decentralized platform Hyperliquid experienced $100 million in liquidations, reflecting a growing shift of traders to DeFi platforms.
In the wake of the crisis, crypto analyst Lark Davis said the crypto market is facing unstoppable selling and fear, leaving many traders without hope. However, he believes the broader economic picture still supports future gains. The market could recover once the U.S. government reopens and money starts returning to the system, but until then, the pain will continue.
With more important economic talks and the FOMC meeting scheduled for next week, analysts warn that volatility will continue. For now, traders are risk-averse, sitting on the sidelines and preparing for the next move in this ongoing crypto storm.
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FAQ
Cryptocurrency markets have fallen due to recession fears, high U.S. interest rates and massive outflows from Bitcoin ETFs, with traders selling and taking risks.
Investor caution led Bitcoin, Ethereum, and Solana to lead the market-wide decline, with more than $100 billion in value wiped out in 24 hours.
About $470 million in positions were liquidated as traders faced margin calls after the prices of Bitcoin, Ethereum, and Solana plummeted.
Volatility is likely to continue ahead of the US employment report and Federal Reserve meeting. Analysts expect further caution until there are signs of lower interest rates or stronger liquidity.
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