With how positive the end of September was in the crypto market, no one would have imagined a bloody start for October. The market suddenly dropped on October 1, which ruined traders’ hopes for a good “uptober.”.
Bitcoin and Ethereum prices experienced a dip that saw the total value of all cryptocurrencies fall by more than 1.3% to over $2.22 trillion. This shaky market was caused by several things, which are explained below.
Middle Eastern geopolitical unrest had a big slam on digital assets and traditional financial markets over the past two days. Recent reports suggest potential escalations involving Iran, Lebanon, and Israel, raising concerns over the global economic landscape.
According to Unusual Whales, the U.S. had intelligence suggesting that Iran may soon launch a missile attack against Israel. Israeli Prime Minister Benjamin Netanyahu’s statement about further actions heightened market anxieties.
Investors are more worried about rising prices because of this and the higher cost of oil. However, this might stop the US Federal Reserve from lowering the interest rates more.
Furthermore, both stock and cryptocurrency markets fell a lot as price worries grew. On Oct. 1, Bitcoin dropped 2.6% to $61,503 before slightly recovering, while Ethereum experienced a brief 12.6% decline before stabilizing.
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Whale Activity and Outflows from Bitcoin and Ethereum ETFs
Large sell-offs from crypto whales have worsened the downturn in the crypto market. According to Lookonchain, an early Ethereum ICO participant sold another 19,000 ETH, worth $47.54 million, over the past two days. This sell-off contributed to increased volatility in the market.
Furthermore, a contributing factor to the depreciation of Bitcoin and Ethereum was ETF outflows. In another tweet, Lookonchain mentioned that there was a net withdrawal of 646 BTC, or $39.02 million, from Bitcoin ETFs.
10,828 ETH worth $25.23 million left the Grayscale Ethereum Trust (ETHE), marking a notable withdrawal from Ethereum ETFs as well. These withdrawals have decreased liquidity and put downward pressure on pricing.
Read Also: Cardano (ADA) Price Correction Not Over Yet: Analyst Warns of Final Drop Before Recovery
Liquidations and Market Volatility
The market has become more volatile due to increasing liquidations, whale sell-offs, and ETF withdrawals. The falling cryptocurrency prices are causing many people to sell, which is pushing the market even lower.
As people lose faith in cryptocurrencies and their total value goes down, the whole field is getting weaker. However, as tensions in global politics continue to unfold and liquidations increase, market participants are closely monitoring developments for signs of stability.
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