Cryptocurrency crash triggers a wave of 500,000 liquidations, market sentiment becomes increasingly divided

Market turbulence resumes. According to the latest data, the crypto market experienced a concentrated sell-off within just 24 hours, with over 490,000 traders facing liquidation, involving a total of $2.1 billion. Among these, long positions accounted for the highest proportion of liquidations, with a single-day net loss of $1.68 billion, reflecting a sharp decline in market participants’ risk appetite.

Triple Negative Factors Resonating, Capital Accelerates Outflows

The recent sharp decline in cryptocurrencies is driven by multiple factors. Industry analysts generally believe that Federal Reserve Chair Powell’s recent cautious stance on interest rate cuts, ongoing US government budget stalemates, and rising valuation risks in the AI sector have collectively dampened market risk appetite. In this environment, capital is rapidly flowing out of the crypto market.

Notably, institutional investors once considered stable buyers are also showing signs of fatigue. Spot ETF market data indicate that Bitcoin spot ETFs and Ethereum spot ETFs have experienced net outflows for five consecutive days, with Bitcoin ETF daily net outflows reaching as high as $580 million. Even more concerning, institutional net buying has hit a seven-month low, sometimes falling below the daily new supply from mining, suggesting a clear weakening in institutional willingness to increase holdings.

Trader Divergence: 20% Downside Focus

As is well known, the derivatives market often reflects the true expectations of market participants. According to options data from a derivatives exchange, put options with an expiration at the end of November and strike prices around $80,000 are the most concentrated, implying traders are betting on approximately 20% downside for Bitcoin.

Regarding the bottom, industry opinions are divided. One on-chain analysis platform offers a relatively pessimistic forecast: if Bitcoin fails to hold the $100,000 psychological level, it could further decline to around $72,000. However, there are also optimistic voices. A co-founder of a futures trading platform believes that if the US government shutdown ends, increased dollar withdrawals from Treasury accounts could boost market liquidity, potentially creating new buying opportunities in the crypto market.

The current crypto plunge has become a psychological test for market participants—whether the time to bottom out has arrived or if downside risks are still not fully unleashed will likely depend on subsequent fundamental developments.