In recent days, the cryptocurrency market has experienced a dip in bullish sentiments, primarily led by the performance of Bitcoin (BTC). Over the past five days, the market has shown signs of stagnation, with the total cryptocurrency market cap decreasing by about 4% within a 24-hour period. As of Friday, November 15, during the early Asian trading session, this market cap hovered around $3.03 trillion.
Bitcoin’s Price Movement
Bitcoin, a major player in the cryptocurrency market, witnessed a price drop of over 2% in the past 24 hours, settling at approximately $87,786 at the time of writing. Despite the overall downturn in the crypto market, Ripple Lab’s XRP stood out among the top 10 crypto assets, registering significant gains of about 18% and trading at around $0.82.
Major Factors Contributing to the Crypto Selloff
Low Demand from Institutional Investors
The initial surge in demand for Bitcoin and other cryptocurrencies following the U.S. elections has diminished over the past week. On Thursday, U.S. spot Bitcoin ETFs saw a reversal in their six-day winning streak, experiencing a net cash outflow of approximately $400 million. Similarly, the U.S. spot Ether ETF ended its seven-day streak of positive cash inflow, recording a net cash outflow of about $3.2 million.
This shift in institutional demand signals a short-term market correction, which is anticipated before a potential continuation of the broader bullish trend in the crypto sector.
Cooling-off in the Leveraged Markets
Following an impressive rally last week, spurred by political developments, the cryptocurrency market has entered a phase of short-term correction. Bitcoin’s price, for instance, has fallen from a high of over $93,000 to below $88,000 as of Friday. This correction phase has been marked by significant liquidations in the leveraged markets.
Since the beginning of the week, more than $3 billion has been liquidated from the crypto-leveraged market, with over $510 million liquidated in the past 24 hours alone, primarily affecting long traders. Consequently, many long traders have transitioned to opening short positions to mitigate their losses, thereby intensifying the impact of a long squeeze.
Future Outlook
As the cryptocurrency market navigates these short-term fluctuations, investors and analysts remain optimistic about the long-term potential of digital assets. The current correction phase is seen as a natural part of the market cycle, offering opportunities for strategic positioning and investment. With ongoing developments in the regulatory and technological landscape, the crypto market continues to be an area of interest for both retail and institutional investors.
