Crypto News
- Notable liquidations and the Bybit breach triggered a $150 billion market downturn
- Declining capital inflows and increasing risk aversion persist in draining liquidity from cryptocurrency markets
The cryptocurrency sector is experiencing a substantial sell-off, with major assets losing billions in value. As of now, Bitcoin [BTC] is trading at $88,993, reflecting a decrease of 7.21% over the past day. Ethereum, XRP, and Solana are also facing significant losses. Ethereum has dropped by 10% to reach $2,426, XRP fell by approximately 10.99% to settle at $2.21, while Solana experienced a loss of about 12.62%, trading at $139.37.
This troubling decline has been driven by several factors including massive liquidations,reduced capital inflows,and heightened risk aversion among traders. So what exactly is behind this collapse?
Crypto News Major liquidations and the bybit hack – A perfect storm for crypto
the crypto market witnessed $340 million in liquidations within just one hour, resulting in over $150 billion wiped out in the last day alone. This extreme volatility has led to fresh panic selling across the board.
Adding to the turmoil was the Bybit hack on Febuary 21st, which inflicted severe damage on investor confidence. The exchange suffered losses amounting to $1.4 billion—marking it as one of history’s largest financial thefts.
Arkham Intelligence
compared
this incident with the theft of $1 billion from iraq’s Central Bank back in ’03 , emphasizing how monumental this attack was .With traders withdrawing their funds from exchanges to avoid exposure , liquidity is evaporating , exacerbating sell-offs.
Source:
X
Crypto News Diminishing capital inflows and increasing risk aversion – Why crypto faces challenges
Another concerning factor is the sharp drop in capital inflows . According to Ali Martinez ,
inflows into cryptocurrencies have
plummeted by nearly half over just ten days,
falling from$52 billion down to$26 .
five billion.
this reduction means fewer new funds are entering into this market,
making it increasingly difficult for assets to recover after significant declines.Without robust inflows,
the cascading effect of liquidation accelerates leading towards deeper crashes within markets.
Simultaneously,
traders are moving away from high-risk assets like Bitcoin as volatility surges across conventional markets.
As an example — The Volatility Index (VIX) jumped up by21 .
74 % within just five days indicating uncertainty present within global financial systems.Historically speaking when appetite for risk diminishes investors tend dump speculative assets worsening conditions for cryptocurrencies further downwards.
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Source:X
CrytoNews FearandGreedindexconfirmsfear
Investor sentimentisrapidlydeterioratingtooasreflectedbytheCryptoFearandGreedIndex.Atthetimeofwriting,itwasreading29(Fear).Justyesterday,itwasstillneutralat40,andamonthago,themarketwasinagreedmodeat61.
Thistypeofmercurialshiftmeansinvestorsareexitingpositionsoutofanguish,furtheracceleratingmarketdeclines.Whileextremeanguishcanusuallyindicateapossiblebuyingopportunity,thelackofcapitalinflowsandongoingfearsellingcanrenderarapidrecoveryunlikely.
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So whyiscryptocrashing?Themarket’sdeclineisn’tattributabletoasingletrigger,butacombinationofdevastatingfactors.TheBybithackhasshatteredconfidence;liquidationshaveintensifiedsellingpressure;capitalinflowshavecollapsed;andglobalmarketsarebecomingmoreunstable.Thishasforcedtraderstoexitriskypositions.Thecryptomarketdependsonliquiditytokeeppricelevels,andrightnow,thisliquidityisevanishing.Untilinflogspickupagainandmarketsentimentimproves,sell-offsarelikelytocontinue.
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