The cryptocurrency market experienced a significant downturn, losing over $120 billion in total market cap, which fell to $2.54 trillion. The sell-off was triggered by the market’s reaction to the CLARITY event, with Bitcoin dropping below $75,000 for the first time since August. Over $570 million in long positions were liquidated. The situation is compounded by expectations of a rate hike from the Federal Open Market Committee (FOMC) meeting, with analysts also anticipating higher U.S. Treasury yields, which could push capital away from risk assets like crypto.
The total crypto market cap shed more than $120 billion, dropping to $2.54 trillion. This marked its lowest wick since the mid-August cycle. The bigger risk could come over the next 24 hours, with the FOMC meeting now in focus. According to analysts, rate expectations are starting to line up in a way that could put more pressure on crypto. Central bank watchers now overwhelmingly expect not only a rate hike this week, but another hike before the end of the year.
Analysts also expect U.S. Treasury yields to rise while the dollar weakens. That could naturally push capital toward safer assets and keep liquidity away from risk assets. The weakness in the S&P500 suggests that investors may already be positioning themselves for this scenario. Bitcoin dropped below $75,000 for the first time since August, adding to the broader selling pressure. Top-cap altcoins followed, with XRP declining by 9.2% to $1.29, and Ethereum falling 4.3% to $2,402, while Solana fell to $97.10.
The last 24 hours have been a liquidation bloodbath. According to CoinGlass data, almost $600 million was wiped out across the crypto market, with more than $570 million coming from long positions alone. This was the biggest long-liquidation wave since the 22nd of August. However, crypto is still showing some resilience. Treasury yields have pushed above 5%, and ETFs saw more than $450 million in outflows on the 15th of September. Yet BTC was down only about 3%, with around $195 million in long positions liquidated.
Leverage still looks relatively controlled, which could be an important divergence for the market. With speculative positioning remaining measured, another round of higher yields, ETF outflows, and even a rate hike could potentially be absorbed without triggering a deeper sell-off.
