Crypto News: Top 3 Reasons Why Crypto Market Lost $4B in a Month
Key Insights
- Crypto news reported about $173M in outflows last week. This marked the fourth consecutive weekly withdrawal. ETFs lead the charge.
- Years of tight liquidity conditions characterized the previous crypto bull market’s narrow leadership.
- Massive token unlocks over this month increased the amount of supply, hence selling pressure.
The crypto market has seen steady outflows over the past month. Per the crypto news, Capital left assets through liquidation, selling, and ETFs. In the past week alone, the market saw more than $173 million leave the cap, taking the monthly loss to $3.74 billion.
The market sentiment was at its lowest level after such massive capital outflow. Hence, we will be expounding on the details of why the crypto market lost almost $4 billion in a month.
Crypto News: Capital Outflow from U.S. Spot Bitcoin and Ethereum ETFs
Crypto news shows U.S. spot ETFs leading the outflow trend. Bitcoin ETFs alone saw more than $130 million leave the market. BlackRock’s IBIT had the most outflows in a single day, of $84.19 million.
At the same time, Ethereum ETFs also had institutions withdraw their capital from the products. ETH ETFs lost a total of $41.83 million, with ETHA leading with about $29.93 million.
The total capital managed by ETFs declined more this week. This day became the eleventh time in sixteen weeks that these ETFs had seen outflows. That drew a clear picture of how the market was.
The loss made more traditional investors less interested because they were afraid of the same thing happening to them.
Crypto Spot ETF net outflows data | Source: Solid Intel
Because of this, the crypto market stayed cautious, and prices kept going down. Some people thought that these outflows were just a temporary shakeout of weak hands, though.
But if even big players were selling, who were the weak holders? It might have been time to sell because the bear market could go on.
Tight Liquidity Over The Last 2 Years
Another reason for the capital outflow could be that liquidity was getting tighter in just two years. Recent data showed that the liquidity risk reading had dropped from a high of 0.99 to less than 0.8 by February 2026.
This tightening of liquidity only caused small price rises in the last crypto bull market.
This higher risk was in line with the drop in the crypto market, but it had the opposite effect on S&P 500 index prices. The results suggested that cryptocurrencies were no longer following the index.
Monthly liquidity risk | Source: IntoTheCryptoVerse, X
Still, some analysts were hopeful. For example, Benjamin Cowen said that in the past, crises often led to less strict policies. That made the crypto market less stressful.
Currently, the situation calls for caution, but it does not mean that things will get worse. Still, there were more factors that were contributing to this capital outflow.
Sell Pressure From Token Unlocks
Typically, an increase in supply while demand stayed low meant disaster for the market. New supply was coming into play with token unlocks, leading to sell-offs.
For instance, ZRO would release $42 million on February 20th, which added 6% in circulation. At the same time, KAITO would add $10.35 million, which was 10.6% of its circulating supply.
Others were Humanity Protocol (H), expecting $21 million, or 4.37%, while PIXEL would unlock $500K and MBG $8.14 million.
SOON and SOSO will increase their circulating supply by $4 million and $5 million, respectively. All these, alongside other unlocks for this week, meant millions of dollars in sell pressure for this week alone.
Token unlocks data | Source: Tokenomist
These influxes made selling easier, as receivers who get them tend to sell their holdings. As a result, it could lead to prices dropping; hence, more capital leaving the crypto markets.
Some projects, like HYPE’s $5 million addition, had buybacks to counteract. This reduced the implications of token unlocks for crypto prices, though not all projects did so. Unlocks make the market more volatile, but they do not guarantee that prices will keep going down.
The post Crypto News: Top 3 Reasons Why Crypto Market Lost $4B in a Month appeared first on The Market Periodical.
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