Bitcoin, ETH, XRP Slump As Liquidations Hit $636M Even With Fed Rate Cut Odds At 89%: Market Wrap

Bitcoin (BTC), Ethereum (ETH) and XRP all tumbled in the past 24 hours as crypto liquidations reached $636 million even amid growing optimism around a December interest rate cut by the US Federal Reserve. 

During the past trading day, the total crypto market cap has also plunged over 5% to below $3 trillion, according to CoinMarketCap data. 

The largest cryptos by market cap all plunged. Bitcoin slid over 5% in the past 24 hours, as did altcoin king Ethereum. 

Smaller tokens took a bigger hit. Ranked at number four in terms of market cap, XRP saw its price plummet over 6%, enough to push its 7-day performance back into the red. 

Meanwhile, Binance’s BNB, Solana (SOL), and TRON (TRX) dropped over 5%, 7%, and 1%, respectively. Dogecoin (DOGE) and Cardano’s ADA token suffered the biggest price drops among the top ten cryptos, with both tokens seeing falls of more than 8%. 

Liquidations Soar

Following the market-wide tumble, 24-hour liquidations in the crypto space topped $636 million, data from Coinglass shows. 

Crypto market liquidation data (Source: Coinglass)

Long trades, which are bets that crypto prices will rise, accounted for the majority of the capital that was wiped out in the last 24 hours. Some $567 million was liquidated from these trades, while only $69.46 million was wiped out from bearish short positions. 

BTC and ETH trades accounted for the lion’s share of the liquidated positions. More than $358 million was wiped out from long trades for the two crypto market leaders. 

“Extreme Fear” Continues To Grip The Market As Traders Anticipate Interest Rate Cut

The recent drop in crypto prices comes as the market remains in a fragile state following the record $19 billion liquidation event on Oct. 10.

The Crypto Fear & Greed Index, a popular measure of market sentiment, fell four points in the last day and nine points from a month ago to stand at 24, signaling “Extreme Fear.” 

But while investor sentiment remains cautious, analysts and traders are growing increasingly optimistic that the Fed will announce an interest rate cut this month. 

In a Polymarket contract asking what the Fed’s decision will be in December, users on the decentralized prediction markets platform have pegged the odds of a 25 bps decrease at 89%, up 1% in the past 24 hours. Only 11% of traders believe there will be no change in rates this month. 

Thin Liquidity And High Leverage Are Holding The Crypto Market Back

Several analysts attributed the Oct. 10 crash to extreme levels of leverage. In crypto, it’s not uncommon for traders to trade with as much as 50X leverage. While this can lead to parabolic gains on small price movements, it also amplifies losses if there is a correction. 

Commenting on the ongoing fragile state in the market, The Kobeissi Letter told its over 1.1 million followers on X that the market is battling with a liquidity issue. 

In addition to the “thin” liquidity in the market, leverage in the market “is at record highs right now,” The Kobeissi Letter said in the post. 

“As a result, the sudden rush of selling volume leads to a domino-effect selloff, which is only amplified by the historic amounts of levered positions being liquidated,” it added. 

It said that the current bear market “is structural in nature,” and that it does not view the recent price drop as a “fundamental decline.” 

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