Today’s Crypto Market Slide: What You Need to Know

On October 7, the cryptocurrency market experienced a downturn as a new surge in oil prices, rising U.S. Treasury yields, a stronger dollar, and substantial long liquidations discouraged traders from engaging with riskier assets.

Data from CoinGecko indicated that Bitcoin was trading around $84,286, representing a decline of approximately 1.5% within the last 24 hours, having dipped to $83,648 at one point. Ether was priced at about $2,619, XRP hovered near $1.47, and Solana was trading close to $118.80.

Among larger cryptocurrencies, Dogecoin faced the steepest decline, falling 4.5% to $0.0906. HYPE traded near $90.80, BNB around $769, and ZEC at approximately $1,317.

The total market capitalization of cryptocurrencies had dropped to around $2.95 trillion, down roughly 1.8% over the past day.

Oil prices and Middle East tensions impact crypto market

Energy markets served as a primary source of downward pressure. On Wednesday, Brent crude oil ascended back to over $101 a barrel due to heightened security concerns surrounding oil shipments from the Middle East.

According to a report from Reuters at least seven tanker attacks occurred during the first week of October, despite a rise in Middle Eastern crude exports in September. Maritime security risks continue to loom large over the Strait of Hormuz, a vital passage that manages approximately one-fifth of the world’s oil supply.

On Wednesday, Reuters reported an increase in Brent crude prices to $101.63 and U.S. crude to $90.24. Concerns about supply were compounded by a looming storm in the Gulf of Mexico and attacks from Iran-aligned Houthi forces.

This decline in Bitcoin mirrored broader market conditions, as heightened Iranian assaults on tankers propelled oil, Treasury yields, and the dollar higher, prompting Bitcoin to dip briefly below $84,000.

The downturn was not isolated to cryptocurrency, as Asian stock markets also fell, with the MSCI Asia-Pacific index excluding Japan declining about 0.5%, as reported by Reuters.

Liquidation of leveraged positions accelerated the decline

Crypto derivatives contributed to amplifying the initial declines.

Data from CoinGlass revealed that $403.58 million worth of leveraged long positions were liquidated within one hour as Bitcoin approached $83,800. During this period, long positions comprised 97% of the total $415.33 million liquidated.

Approximately $554.8 million in crypto positions were liquidated over the entire day, including $487 million in long positions. The concentration of losses among traders betting on price increases meant that falling prices forced exchanges to close leveraged positions, resulting in increased sell orders.

The one-hour liquidation event accounted for just about 0.27% of total open interest, according to the same CoinGlass data. A significant amount of leverage remained in the derivatives market following the sharp price movement.

The abrupt drop followed Bitcoin’s previous struggles to maintain levels above $87,000. Coverage from Crypto.news indicated that buyers had been supporting a significant support zone between $83,300 and $84,600 prior to the liquidation wave that struck on Wednesday.

Rising Treasury yields and a stronger dollar create additional pressure

U.S. bond markets added another layer of pressure as traders closely awaited the Federal Reserve’s September meeting minutes.

Reuters reported that the 10-year Treasury yield increased to 5.307% on Wednesday, approaching levels unseen in decades. Meanwhile, the 30-year yield hovered near 5.69%, while markets braced for a $39 billion auction of 10-year Treasuries.

Simultaneously, the dollar strengthened. The dollar index rose by 0.16% to 102.07 as safe-haven demand intensified amid geopolitical unrest.

Bitcoin had been struggling against such headwinds even before the recent drop. A report from Crypto.news noted that weaker ETF buying and resistance around $87,000 had limited spot demand, preventing BTC from decisively reaching $90,000.

Nevertheless, fund flows present a mixed picture. On October 6, U.S. spot Bitcoin ETFs recorded net inflows of $118.8 million, while Ether ETFs faced outflows of $201.9 million, according to fund-flow data. This suggests that Bitcoin ETF interest revived ahead of the drop following a prior session’s decline of $89.9 million.

Focus shifts to Federal Reserve meeting minutes for crypto traders

Market attention is now fixed on the Federal Reserve’s minutes from the September meeting, expected later on Wednesday. The central bank raised interest rates by 25 basis points in that session, and traders are eager for insights into whether another hike may be deemed necessary this year.

Futures markets currently assign a 20.5% probability to an October rate increase, significantly lower than the levels observed a week prior. Nevertheless, markets still anticipate a higher likelihood for an increase by December.

The current selling pressure on Bitcoin coincides with contrasting on-chain metrics. Santiment indicated that a net total of 24,073 BTC left exchanges on Monday, marking the largest single-day withdrawal since March 1. The Bitcoin held on exchanges dipped to about 6.5% of the circulating supply.

Wallets containing between 10 and 10,000 BTC accumulated an additional 86,702 BTC over the past three weeks, as noted by Santiment. However, the analytics firm cautioned that “outflows alone guarantee nothing,” while emphasizing that decreasing exchange balances could be bullish if demand remains steady.

Crypto analyst Ali Martinez identified Bitcoin’s primary support zone between $83,300 and $84,600, where approximately 1.59 million BTC previously changed hands.

His findings indicate that for buyers to attempt a push higher, they must surpass $86,700. The target of $100,000 remains contingent on maintaining support and achieving a successful breakout.