Crypto market crash: What’s behind the $700 billion wipeout?

The crypto market crash accelerated this week, with Bitcoin falling briefly below the important psychological point at $100,000. Most altcoins have plunged, with meme coins like Shiba Inu, Dogecoin, and Pepe being the top laggards.

This crypto crash has led to a $700 billion wipeout, as the market capitalization of all tokens has moved from a high of $4.3 trillion to $3.4 trillion today. This article highlights some top reasons why Bitcoin and altcoins are plunging.

Crypto market crash triggered by liquidation tantrum

One major reason why the crypto market crash is happening is that the liquidation tantrum has accelerated recently. This tantrum accelerated after the crypto industry suffered a $20 billion wipeout in a day on October 11 after Donald Trump threatened to impose huge tariffs on Chinese goods.

Liquidations have continued in the past few weeks. Data shows that they jumped by 58% in the last 24 hours to over $1.9 billion. Over 441k traders were wiped out in the last 24 hours.

Therefore, with liquidations rising, many investors have opted to either stay out of the market or sell their holdings to prevent a similar wipeout.

Indeed, data shows that the futures open interest in the crypto industry has continued falling in the past few months. It dropped by 4.67% in the last 24 hours to $141 billion. Options traders have largely placed bets that the Bitcoin price could crash to $80,000.

Whale selling has contributed to the crypto crash

Meanwhile, there are signs that whale investors have continued to sell their tokens in the past few days, which has contributed to the crypto market crash.

According to Bloomberg, longtime Bitcoin holders have offloaded 400,000 tokens worth over $45 billion. This selling has led to more pressure in Bitcoin, and other cryptocurrencies in the past few weeks. In a note, an analyst cited by Bloomberg said:

Crypto ETF inflows has slowed 

Meanwhile, the crypto market crash is happening as the recent data shows that institutional demand for cryptocurrency ETFs has continued falling in to past few days. 

Data compiled by SoSoValue shows that spot Bitcoin ETFs had outflows of over $577 million on Tuesday, the fifth consecutive day in the red. These funds have shed almost $2 billion in assets in the last five days.

Spot Ethereum ETFs have also had outflows in the last five days, bringing their cumulative inflows to $14 billion. They have shed over $700 million in assets.

Bitcoin and Ethereum treasury companies' woes remain 

The other main reason why the crypto market is happening is that Digital Assets Treasury (DAT) companies are in trouble, which has affected their accumulation. 

Strategy stock price has plunged by over 50% from its highest level in 2024. Similarly, Metaplanet has plunged, with its market net asset value moving below the important support at 1. 

The same is happening among other treasury companies. SharpLink, a top buyer of Ethereum, has crashed by 92% from its highest level this year. Similarly, Tom Lee's BitMine stock is down by over 70% from the all-time high.

The deteriorating performance in this industry is affecting the amount of Bitcoin and Ethereum purchases as the NAV multiples has fallen.

There are other reasons why the crypto market crash has happened this year, including the fact that Bitcoin has formed numerous bearish patterns, including a head and shoulders and a rising wedge. Also, the US dollar has jumped, while inflation remains at an elevated level.