Crypto Market Selloff: $100 Mln Liquidated Amid Profit-Booking And ETF Volatility

Amid a crypto market selloff on January 22, the major cryptocurrencies like Bitcoin, Ethereum, Solana, XRP, and others, faced a significant downturn, witnessing over $100 million in liquidations in the past 24 hours, propelled by a decline in investor risk tolerance. Notably, this market retreat is attributed to profit-booking maneuvers by many investors, speculations about future market performance, and the lingering impact of the recently approved Spot Bitcoin ETF, adding a layer of volatility.

Crypto Market Selloff: Potential Factors & Market Trends

According to CoinGlass data, over the past 24 hours, the crypto market witnessed an unprecedented liquidation of $107.25 million, affecting approximately 55,000 traders. The largest single liquidation, valued at $3.20 million, occurred on OKX – ETH-USD-SWAP. Notably, Ethereum led individual crypto liquidations with $22.94 million, followed closely by Bitcoin at $20.75 million, and Solana at $6.53 million.

Meanwhile, examining the crypto exchanges, Binance topped the list with $52.62 million in liquidation, trailed by OKX at $34.19 million, and Bybit with $12.06 million. However, amid this turmoil, Bitcoin futures Open Interest data shows a 1.81% surge in total BTC Futures open interest over the last 24 hours.

In contrast, the BTC Open Interest on the CME exchange fell 1.66% from yesterday to $4.69 billion or $114.49K BTC. Simultaneously, the Bybit exchange witnessed a 1.05% dip in Bitcoin Open Interest to 76.49K BTC or $3.14 billion.

Meanwhile, the market pundits attribute the dip to profit-booking opportunities and traders assessing market conditions ahead of the release of Q4 prelim U.S. GDP Data and PCE inflation data this week. These crucial data points will illuminate the current state of the U.S. economy, potentially influencing the Federal Reserve’s stance. In addition, the market is also eagerly waiting for the Fed’s gathering next week, which would shed light on the potential future stance of the Fed.

Simultaneously, ongoing legal challenges in the crypto space, particularly the SEC’s actions against Binance and Coinbase, add to investor concerns. Considering that, the legal outcomes as well as the macroeconomic factors like the forthcoming Fed meeting are eagerly anticipated, with expectations of insights into the Federal Reserve’s future moves.

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Market Dips Amid ETF-Led Volatility

As of writing, the global crypto market witnessed a slump of 3.16% to $1.59 trillion, with the overall trading volume rising 34.50% to $42.49 billion. Among major cryptos, Bitcoin, Ethereum, Solana, BNB, XRP, and others have witnessed substantial declines over the last 24 hours.

The Bitcoin price plunged 2.63% and traded at $40,535.05 during writing on Monday while touching a low of $40,364 in the last 24 hours. On the other hand, the Ethereum price was down 4.22% to $2,380.04, while the BNB price slumped 2.03% to $312.66.

Among other cryptos, the Solana price witnessed a significant slump of 6.29% to $86.21, with the XRP price falling about 4.29% to $0.5275. The Cardano price, which has gained notable traction lately, fell 4.68% to $0.4927.

Meanwhile, the recent slump is also attributed to Grayscale selling Bitcoins. As reported by CoinGape Media, Grayscale’s recent selling of Bitcoins after the GBTC share sale has intensified market pressure.

Notably, crypto analyst Chris J Terry suggests a continuation of a flat or downward trend until the completion of the estimated $25 billion liquidation of Grayscale Bitcoin Trust (GBTC). Terry critiques Grayscale’s decision to maintain ETF fees at 1.5%, foreseeing potential consequences for the broader market.

However, Grayscale CEO Michael Sonnenshein disputes the notion that high GBTC fees are driving substantial liquidations. Galaxy Digital CEO Mike Novogratz acknowledges potential selling activity in GBTC but predicts investors will shift to other ETFs, endorsing $BTCO.

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