The entire crypto market fell on October 1, as growing geopolitical tensions in the Middle East, increased long-term liquidations, and a sell-off in U.S. stocks appeared to dampen investor enthusiasm for “ Uptober.”
Over the past 24 hours, the total cryptocurrency market capitalization fell more than 1.3% to around $2.22 trillion, and stocks fell.
Let’s take a look at the factors that are driving the crypto market down today.
Cryptocurrency prices tumble as Middle East situation escalates
The instability seen in stocks and digital assets on October 1 follows reports of a possible escalation in the Middle East between Iran, Lebanon and Israel.
The United States has indications that Iran is preparing to imminently launch a ballistic missile attack against Israel, according to Disclose.tv.
Israeli Prime Minister Benjamin Netanyahu said the measures taken so far “won’t be enough,” as reported by CNBC. As oil prices continue to rise, they will likely lead to higher inflation, limiting the ability of the U.S. Federal Reserve to continue cutting interest rates.
An hour after Wall Street opened on October 1, the S&P 500 was down 1.1%, while the Dow Jones index lost 302 points, or 0.7%. The Nasdaq Composite index fell 1.4%.
Likewise, cryptocurrency prices have shown high volatility, with Bitcoin BTCUSD down 2.6% in the last 24 hours to trade at $61,503 before rallying back to $62,557 at press time. Ether ETHUSD which initially fell 12.6% to $2,534, is now trading up 0.5% to $2,569.
Over $340M in Liquidations Puts Crypto Traders Offside
Data from CoinGlass reveals that long traders – those betting on the crypto market to rise – witnessed a total of $291.3 million in liquidations over the past 24 hours. In comparison, short traders suffered more than $55.6 million in liquidations during the same period.
Bitcoin liquidations reached $53 million in the last 4 hours, with more than $71.8 million in cumulative leveraged positions liquidated that day, according to CoinGlass data. Total liquidations across the entire crypto market stand at $346.8 million over the past 24 hours, and this figure is growing at press time.
When long positions are liquidated, traders betting on rising prices are forced to sell their positions, often at a loss. This increased selling pressure has driven down the crypto market valuation today.
Meanwhile, the reduction in open interest signals a decrease in active futures contracts, indicating that traders are closing their positions and exiting the market.
Nonetheless, funding rates for most major coins, including Bitcoin and Ether, are positive, indicating that traders still in the market are generally more bullish, as they are willing to pay more to maintain long positions.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.