Crypto Market Hit by $1.7B in Liquidations

The cryptocurrency market just experienced one of its sharpest drops of the year, with about $1.7 billion in leveraged positions liquidated in the past 24 hours. The vast majority, $1.62 billion, came from long positions, showing that traders betting on higher prices were caught off guard by the sudden pullback.

Within just four hours, more than $1.09 billion in positions were wiped out, including a single $12.7 million BTC-USDT order on OKX - how quickly market sentiment can turn!

Note:  Liquidations happen when traders can’t meet margin requirements and exchanges forcibly close their positions.

The selloff dragged bitcoin down 2.5% to $112,890 and ether down 6.2% to $4,196 at one point. More recent trading shows bitcoin around $112,418 and ether near $4,157.

Analysts had previously flagged the Fed’s September interest rate decision as a potential turning point. The central bank delivered a 25 basis point rate cut, a move that initially supported inflows into crypto funds. Yet, despite the hawkish cut, markets are showing signs that the bull cycle may be running out of gas.

Inflows stay strong despite volatility

Notably, net inflows into crypto investment products totaled $1.9 billion last week, marking the second consecutive week of strong buying. US funds dominated, raising $1.8 billion, led by BlackRock's Bitcoin Spot ETF with $866.8 million.

Ethereum funds also saw strong demand, raising $772 million, while Solana and XRP products attracted $127.3 million and $69.4 million, respectively.

As a result, the total volume of crypto assets under management reached a year-to-date high of $40.4 billion. Institutions continue to expand their holdings despite short term volatility.

Takeaways for traders

• Leveraged positions wipeout shows the market can turn against longs fast.
• Rate cuts are supportive in theory, but not enough to guarantee continued bullish momentum.
• Institutional inflows suggest confidence, but spot prices are signaling fatigue.