The crypto market has fallen on Oct. 7 as another rise in oil prices, elevated U.S. Treasury yields, a firmer dollar and heavy long liquidations pushed traders away from riskier assets.
Summary
- Bitcoin fell near $84,286 as oil, Treasury yields and the U.S. dollar moved higher Wednesday.
- More than $403 million in leveraged crypto longs were liquidated within one hour during selling.
- Brent crude climbed above $101 as tanker attacks and Middle East supply risks pressured markets.
- Markets await Federal Reserve minutes while traders price only a 20.5% chance of October hike.
- Bitcoin exchange supply fell to 6.5% after 24,073 BTC left exchanges, Santiment data showed.
CoinGecko showed Bitcoin trading near $84,286, down roughly 1.5% over 24 hours after falling as low as $83,648. Ether traded around $2,619, while XRP stood near $1.47 and Solana changed hands around $118.80.
Dogecoin was one of the weakest large tokens, dropping 4.5% to $0.0906. HYPE traded near $90.80, BNB around $769 and ZEC close to $1,317.
The total cryptocurrency market capitalization stood near $2.95 trillion, down roughly 1.8% over 24 hours.
Oil and Middle East tensions are hitting crypto
Energy markets provided the first source of pressure. Brent crude climbed back above $101 a barrel Wednesday as security concerns around Middle East oil shipments intensified.
Reuters reported at least seven tanker attacks during the first week of October, even as Middle East crude exports recovered during September. Maritime security risks remain elevated around the Strait of Hormuz, a route that handles roughly one-fifth of global oil supplies.
On Wednesday, Reuters reported Brent crude rising to $101.63 and U.S. crude reaching $90.24. A developing Gulf of Mexico storm and attacks by Iran-backed Houthi forces added to supply concerns.
Bitcoin’s drop followed the same change in cross-market conditions. Stepped-up Iranian attacks on tankers had helped push oil, Treasury yields and the dollar higher as Bitcoin briefly moved below $84,000.
The pressure was not confined to crypto. Asian shares weakened Wednesday, with the MSCI Asia-Pacific index excluding Japan falling around 0.5%, according to Reuters.
A leveraged-long wipeout made the drop faster
Crypto derivatives then amplified the initial move.
CoinGlass data showed $403.58 million in leveraged long positions being liquidated within one hour as Bitcoin fell toward $83,800. Long positions accounted for 97% of the $415.33 million liquidated during that period.
Across 24 hours, roughly $554.8 million in crypto positions were liquidated, including $487 million in longs. The concentration of losses among traders betting on higher prices meant falling prices automatically forced exchanges to close leveraged positions, adding more sell orders during the decline.
The one-hour wipeout represented only around 0.27% of total open interest, according to the same CoinGlass data. Large amounts of leverage therefore remained in the derivatives market after the sharp move.
The sudden drop followed Bitcoin’s repeated failure to hold above $87,000. In elated crypto.news coverage of Bitcoin’s repeated rejection near $87,000, buyers had already been defending a dense support zone between $83,300 and $84,600 before Wednesday’s liquidation wave.
Higher Treasury yields and the dollar add pressure
U.S. bond markets supplied another source of pressure as traders waited for the Federal Reserve’s September meeting minutes.
Reuters reported that the 10-year Treasury yield rose to 5.307% Wednesday, staying close to levels not seen in decades. The 30-year yield traded near 5.69%, while markets prepared for a $39 billion 10-year Treasury auction.
The dollar strengthened at the same time. The dollar index gained 0.16% to 102.07, with safe-haven demand increasing amid geopolitical tension.
Bitcoin had already struggled against that combination before the latest selloff. Crypto.news reported that weaker ETF buying and resistance near $87,000 had left spot demand unable to push BTC decisively toward $90,000.
Fund flows remain mixed, however. U.S. spot Bitcoin ETFs recorded $118.8 million of net inflows on Oct. 6, while Ether ETFs lost $201.9 million, according to fund-flow data. Bitcoin ETF buying therefore returned before Wednesday’s drop after the funds lost $89.9 million the previous session.
Fed minutes are the next test for crypto traders
Attention now turns to the Federal Reserve’s September meeting minutes, due later Wednesday. The central bank raised interest rates by 25 basis points at that meeting, and traders are looking for clues on whether policymakers see another increase as necessary this year.
Futures markets put the probability of an October rate increase at roughly 20.5%, sharply below levels seen a week earlier. Markets still price a much higher chance of another increase by December.
Selling in Bitcoin is occurring alongside some contrasting on-chain data. Santiment reported that 24,073 BTC left exchanges on net Monday, the biggest single-day withdrawal since March 1. Bitcoin held on exchanges fell to roughly 6.5% of circulating supply.
Wallets holding between 10 and 10,000 BTC accumulated another 86,702 BTC during the past three weeks, according to Santiment. The analytics firm cautioned that “outflows alone guarantee nothing,” while describing falling exchange balances as supportive if demand remains steady.
Crypto analyst Ali Martinez has placed Bitcoin’s main support zone between $83,300 and $84,600, where roughly 1.59 million BTC previously changed hands.
His analysis identifies $86,700 as the level buyers need to clear before another attempt higher, while the $100,000 target remains conditional on support holding and a successful breakout.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
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