Crypto Market Suffers Setbacks Due to Ongoing Liquidations and Market Corrections

The crypto market suffered further declines on Thursday, as Bitcoin fell below the $112,000 mark. The largest cryptocurrency recorded a drop of 2%, while Ether and Solana faced even greater losses. Ether's price fell by about 5% below the $4,000 level before partially recovering, marking the lowest level since August. This occurred in an environment of net outflows from Ethereum-based exchange-traded funds. Samer Hasn, a senior market analyst at the wealth brokerage platform XS.com, wrote that the ongoing pressure is due to the lack of sufficient buying power to support prices following a massive wave of liquidations on Monday. These liquidations further weakened market sentiment, while corrections in the broader stock markets also amplified the already cautious market sentiment. Earlier in the week, more than $1.6 billion in long positions were liquidated, unsettling investors. According to CoinGlass, crypto-related assets worth $511 million were liquidated in the past 24 hours. Meanwhile, stocks fell from their recent highs as investors expressed concerns about a possible overvaluation driven by enthusiasm for artificial intelligence and uncertainties regarding the Federal Reserve's interest rate policy. Traditionally, September is seen as a seasonally volatile month for cryptocurrencies, with the last three months of the year normally bringing positive momentum. Additional headwinds come from activities in the Treasury General Account, which is being replenished through the issuance of Treasury bills and bonds, straining liquidity in the crypto market. These capital movements towards government debt instruments reduce demand for riskier assets like Bitcoin. The shake-up in the crypto market also affected crypto-related stocks. Trading platforms such as Robinhood and Coinbase recorded declines of over 1%. Bitcoin investor Strategy and stablecoin issuer Circle also had to register losses.