Bitcoin Price Crash Wipes $1.4 Trillion as ETF Exodus and Fed Fears Trigger Market Panic

The cryptocurrency market is reeling from a historic collapse. Bitcoin’s price plummeted to $81,900 on Friday, extending a brutal sell-off.

This crash erased over $1.4 trillion from the total crypto market capitalization. The downturn marks a decline of more than 30% from its October peak.

Institutional Flight and Record ETF Outflows

Institutional investors are leading the sell-off. Data from Reuters shows BlackRock’s iShares Bitcoin Trust experienced a massive $355 million outflow.

November has become the worst month for crypto ETFs since February. Total liquidations have reached a staggering $3.8 billion.

Leveraged traders were decimated in the drop. Nearly $2 billion in positions were liquidated within 24 hours.

Approximately 396,000 traders saw their accounts wiped out. The Crypto Fear & Greed Index plunged to 11, signaling extreme fear.

Macroeconomic Storm Hits Risk Assets

The sell-off was fueled by a shift in Federal Reserve policy expectations. Hopes for a December interest rate cut have dramatically faded.

Strong U.S. jobs data forced investors to reconsider. The economy added 119,000 jobs in September, far exceeding forecasts.

According to the Associated Press, Fed officials are now preaching caution. They insist inflation remains stubbornly above their target.

The aftermath of the U.S. government shutdown added to the uncertainty. Key economic data was delayed, leaving markets unstable.

Traditional markets also fell sharply. The Nasdaq and S&P 500 both posted significant losses this week.

Is Bitcoin’s Four-Year Cycle Broken?

Some analysts question if Bitcoin’s historical pattern still holds. The four-year cycle tied to its “halving” may be decoupling.

Increased institutional involvement is changing market dynamics. This new reality could mean more volatility ahead.

Market depth has failed to recover since October’s initial crash. Thin order books are amplifying price swings.

Major altcoins like Ethereum and Solana fell 20-35%. Smaller cryptocurrencies suffered even steeper losses.

The recent Bitcoin price crash underscores the market’s fragility amid shifting macro winds. The path to recovery remains uncertain as the great ETF exodus continues.

Thought you’d like to know-

What caused the Bitcoin price to crash?

A combination of massive ETF outflows and changing Federal Reserve policy sparked the sell-off. Strong U.S. jobs data reduced hopes for an interest rate cut, making risky assets less attractive.

How much money was liquidated?

Nearly $2 billion in leveraged positions were liquidated in 24 hours. This led to 396,000 traders being forced out of their positions.

Which Bitcoin ETF saw the biggest outflows?

BlackRock’s iShares Bitcoin Trust led the exodus. Clients pulled $355 million from the fund, according to Reuters.

What is the Crypto Fear & Greed Index showing?

The index plummeted to a reading of 11. This indicates the market is in a state of “extreme fear,” its lowest level since late 2022.

Will the Federal Reserve cut rates soon?

Market expectations for a December rate cut have collapsed. The probability dropped from 64% to around 33% after strong jobs data.

Have altcoins been affected?

Yes, major altcoins like Ethereum and Solana have fallen sharply. They are down 20-35% from their recent highs.

Trusted Sources

Reuters, Associated Press, CoinDesk, DL News, Anadolu Agency