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The market went against us just when the global cryptocurrency world believed we were prepared for "uptobar." Today's 4.5% decline in the price of Bitcoin has left it trading just around $60,000. On October 1, the whole cryptocurrency market fell as investor enthusiasm seemed tempered by growing political unrest in the Middle East, increased long liquidations, and a decline in US markets.
In the past day, stocks have declined, and the total market capitalization of cryptocurrency fell by more than 1.3% to almost $2.22 trillion. With a 6% decline, Ethereum is currently trading below $2,500. Naturally, there were 10–20% drops in numerous altcoins. But what is happening?
The reason behind the Down
The volatility seen in stocks and digital assets on October 1st combined with rumours of a potential conflict between Israel, Iran, and Lebanon in the Middle East. There are signs the US believes Iran is getting ready to attack Israel with ballistic missiles.
Israeli Prime Minister Benjamin Netanyahu declared that the current course of action "will not be enough." If oil prices keep rising, inflation will probably increase, and the US Federal Reserve will be less able to lower interest rates.
How is the Crypto Market Affected?
On October 1, an hour after Wall Street began, the Dow Jones index fell 302 points or 0.7%, and the S&P 500 was down 1.1%. 1.4% was taken off the Nasdaq Composite index.
Similarly, crypto prices demonstrated extreme volatility, with Bitcoin BTCUSD losing 2.6% over the last 24 hours to exchange at $61,503 before returning to $62,557 at the time of posting. Ether is currently trading 0.5% higher at $2,569 after dropping 12.6% to $2,534.
Market Volatility
Long traders - those who are banking on the cryptocurrency market's upward trajectory - have seen liquidations totalling $291.3 million in the past day. In contrast, short sellers paid nearly $55.6 million in liquidations during that time.
The total value of liquidated bitcoin positions hit $53 million in the last four hours, with stretched holdings totalling over $71.8 million for the day. At the time of publication, there had been $346.8 million in liquidations in the larger cryptocurrency market during the past day.
Holdings of Traders
Traders who are counting on rising prices are compelled to sell their bets when their holdings are liquidated, frequently at a loss. The current valuation of the cryptocurrency market has decreased due to the increased selling demand.
In the meantime, the decline in open interest implies a reduction in the number of active futures contracts, which suggests that traders are retreating from the market and closing their holdings.
However, most popular coins, like Bitcoin and Ether, have positive funding rates, which suggests that traders still active in the market are typically more hopeful since they are prepared to pay a premium to hold onto long positions.
