- The cryptocurrency market witnessed a bloodbath that wiped out $500M in both long and short positions.
- The bloodbath was fueled by escalating geopolitical tensions in the Middle East.
The cryptocurrency market traded in the red on the 2nd of October as the total market capitalization fell by more than 5% to $2.25 trillion at press time.
Bitcoin [BTC] succumbed to the bearish pressure and plunged to a seven-day low below $61,000. Most altcoins also wiped their recent gains, as Ethereum [ETH] dropped by 6.5% to trade at $2,473 at press time.
Binance Coin [BNB] and Solana [SOL] were also down by 4.9% and 5.7%, respectively, while Ripple [XRP] fell below $0.60 after a 3.6% dip.
Dogecoin [DOGE] recorded the most losses among the top ten largest cryptocurrencies by market capitalization after dropping by 9% to trade at $0.108 at press time.
Similar drops were also seen across traditional financial markets, with Japan’s Nikkei 225 index falling by 2.5% according to Google Finance.
Crypto market reacts to geopolitical tensions
Escalating geopolitical tensions in the Middle East after Iran fired hundreds of missiles toward Israel fueled these widespread losses. The event saw traders grow anxious about the performance of risk assets.
During times of uncertainty, investors tend to flee from risk assets such as crypto and flock to safe-haven assets.
For instance, as crypto prices plunged, gold saw minimal losses of less than 1%.
Source: Coinglass
Data from Coinglass shows that in the last 24 hours, more than $500 million was liquidated from the market, with $450 million of these being long positions. These liquidations impacted more than 155,000 traders.
Bitcoin and Ethereum saw the highest liquidations of $140 million and $110 million, respectively. Per Coinglass, the largest single liquidation occurred on Binance, where one trader was liquidated for more than $12 million.
Crypto ETFs post outflows
Data from SoSoValue shows that on the 2nd of October, U.S. spot Bitcoin exchange-traded funds (ETFs) saw $242 million in outflows, the highest level since early September.
Fidelity’s Bitcoin ETFs saw the biggest outflow of $144 million. All other Bitcoin ETF products saw zero to negative flows apart from BlackRock. The iShares Bitcoin Trust ETF continued its positive streak, with $40M in inflows.
Ethereum ETFs also came in negative with $48M in outflows, the highest level in more than a week.
The negative data comes as the Bitcoin Fear and Greed Index plunged to 42, its lowest score in more than two weeks, as fear gripped the market.
