The cryptocurrency market, spearheaded by Bitcoin (BTC), has witnessed a downturn in bullish sentiments over the past week. The total market capitalization of cryptocurrencies has seen a decline, dropping by 4% in the last 24 hours to around $3.03 trillion during the early Asian trading session on Friday, November 15.
Bitcoin’s Recent Price Movements
Bitcoin’s value has experienced a notable decrease, with a drop of over 2% in the last 24 hours, bringing the trading price to approximately $87,786 at the time of writing. Amidst the top 10 crypto assets, Ripple Lab’s XRP emerged as a standout performer, registering significant gains of around 18% to trade at approximately $0.82.
Major Factors Contributing to the Crypto Selloff
Low Demand from Institutional Investors
Following the initial surge in demand for Bitcoin and other cryptocurrencies post-U.S. elections, interest from institutional investors has noticeably waned over the past week. On Thursday, U.S. spot Bitcoin ETFs concluded a six-day winning streak, experiencing a net cash outflow of approximately $400 million. Similarly, the U.S. spot Ether ETF ended its seven-day cash inflow streak, witnessing a net cash outflow of about $3.2 million on the same day.
This decline in institutional interest is anticipated to lead to a short-term market correction before the broader bullish trend resumes.
Cooling-off in the Leveraged Markets
Following a remarkable rally spurred by Donald Trump’s overwhelming victory, the cryptocurrency market has encountered a short-term correction in recent days. Bitcoin’s price has descended from a peak exceeding $93,000 to stabilize below $88,000 on Friday.
Since the week’s commencement, over $3 billion has been liquidated from the crypto-leveraged market. In the past 24 hours alone, more than $510 million has been liquidated, predominantly involving long traders. This liquidation has prompted many long traders to open short positions as a strategy to mitigate losses, thereby intensifying the effects of a long squeeze.
Looking Ahead in the Crypto Market
As the cryptocurrency market navigates these turbulent times, investors and traders are closely monitoring the dynamics between institutional interest and market corrections. While the short-term outlook may appear challenging, the long-term prospects for Bitcoin and other cryptocurrencies remain promising, provided market fundamentals stabilize.
In summary, understanding the underlying factors influencing the current crypto market trends is crucial for both seasoned investors and newcomers. By staying informed and adapting strategies accordingly, market participants can better navigate the complexities of the crypto landscape.
