Will Crypto Market Crash Deeper As $1B In Bitcoin, ETH, XRP Liquidated Ahead PCE Data?
Highlights
- The crypto market liquidations surpassed $1 billion today, which exacerbated volatility.
- In addition, a $10 billion BTC options expiry and MSTR stock crash also weighed on the market.
- Traders are now awaiting the PCE inflation data, which could hint if the Fed could turn dovish or stay hawkish in the future.
- Meanwhile, the 59,000 level remains a key support level for Bitcoin to stage a recovery.
On Thursday, the crypto market crash fears further fueled as traders were hit with a heavy $1 billion liquidation push. Moreover, a humongous $10 billion Bitcoin options expiry, weak institutional demand and the concerns around U.S. PCE inflation data added to the sentiment.
Crypto Market Crash Triggers $1 Billion In BTC, ETH, XRP Liquidations
CoinGlass data revealed that a total of $1 billion worth of crypto liquidations occurred over the past 24 hours. Moreover, 176,530 traders were impacted in the process. The losses were primarily attributable to long positions valued at $780.05 million. Meanwhile, short liquidations valued at $220.54 million.
As of writing, Bitcoin led the liquidation wave with $415.83 million liquidated during today’s crypto market crash. Ethereum came in second with $230.31 million while XRP traders lost $14.22 million.
Bitcoin, Ethereum and XRP Remain Under Pressure
At the time of writing, Bitcoin was trading at $61,691, which represents a 1.57% drop in the last 24 hours. Ethereum (ETH) fell 1.14% to $1,651, while XRP price tumbled 1.75% to $1.08.
The Bitcoin options market on Deribit is set to expire around $10 billion in contracts on Friday amid the crypto market crash. Numerous contracts were activated at a much higher price of Bitcoin as bullish wagers. The prices are now well below several strike levels and traders may have to make adjustments to their positions or increase their downside hedging activity.
Meanwhile, XRP futures data shows Binance traders maintained a 2.57 long-short ratio and OKX traders a 2.66 ratio. With the bulls holding the majority of traders’ positions, it is obvious that they are still keeping their faith in a turnaround.
However, these imbalances can make for a higher risk of liquidation in times of crypto market volatility. If the selling pressure continues to grow, then the heavily crowded long positions may be subjected to yet another round of forced selling. It could exacerbate the crypto market crash concerns.
Demand has also fallen off a lot from the institutions. U.S. spot Bitcoin ETFs have now seen around $6.4 billion worth of withdrawals in the past 30 days. It represents the biggest monthly redemption ever for BTC ETFs.
Strategy Stock Collapse Fuels Market Anxiety
Another significant issue that the traders have to watch out for is the recent sell-off in Strategy shares.
The MSTR stock price crashed below the $100 mark following a 9.26% drop. The decline also impacted Bitcoin as it briefly dipped under the $60,000 level on Wednesday. It further stoked fears that the weakness of Strategy shares could help further dampen sentiment.
Prediction market data also has become more bearish. The odds are currently at 64% that Bitcoin will drop below $50,000 and the odds of a nosedive below $45,000 are up to 46%.
PCE Inflation Data In Focus Amid Crypto Market Crash
Investors are now waiting for the latest U.S. PCE inflation report, the Fed’s favored inflation measure. Economists predict that headline PCE inflation will post a 0.5% gain in May from a 0.4% gain in April. Annual inflation is expected to rise to 4.1% from 3.8%.
Core PCE inflation is forecasted to increase by 0.3% for the month and 3.4% for the year. If the reading is stronger-than-expected, it could lead to concerns of the Fed keeping the policy rate at a higher level for longer. This may add to the stress on risk assets and increase the extent of the crypto market crash.
These fears have been bubbling up after Bank of America recently made a dramatic shift in its forecast. Recently, BofA analysts projected three interest rate hikes this year, which marks a huge difference from the earlier Fed pause narrative.
Bitcoin Faces Key Test As Volatility Surges
Bitcoin’s recent fall has come at a critical $59,000 support level, which was highlighted by crypto analyst Ted Pillows.
He wrote on X: “BTC almost tapped the $59,000 zone before a bounceback. The only concern is this rally has been driven mostly by short positions being closed.” On the positive side, Pillows added, “But if spot demand arrives and Bitcoin reclaims the $65,000 level, it could see a decent rally.”
Pillows’ chart indicates that there is immediate resistance on the charts at $64,200 with another supply zone at $66,600. Moreover, a bigger resistance now sits at $70,600.
Additionally, the chart suggests that Bitcoin has retested a zone of support around $59,000. It hints at the potential for a sharp price decline to the $56,500 and $55,100 levels if the support levels fail amid the crypto market crash.
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