It’s a sea of red in the cryptocurrency space as the cryptocurrency market capitalization falls below $2 trillion to currently stand at $1.96 trillion as of the time of this writing, according to Coinmarketcap. This decline is as a result of flagship cryptocurrency asset, Bitcoin, falling below the $40,000 critical support zone.
Data from Coinglass reveals that $209.62 million worth of longs have been liquidated since Bitcoin descended below the $40,000 zone. This figure is expected to go higher if Bitcoin continues its descent into the $30,000 zone.
The crash is as a result of the strength in the dollar index (DXY), which is a measure of the strength of the United States’ dollar. The DXY has started the trading week, up 0.46%, reversing all of the loss it made after the Non-Farm Payroll report performed less than expectation.
What you should know
As of the time of this writing, Bitcoin is down over 15% in the last seven days. Altcoins, as you would expect, are feeling the heat, as majority of the top 10 are down 20% or more. Ether, the native token of the Ethereum blockchain is currently trading below the $3,000 trading range, down 23% in the last 7 days.
Data from Glass Nodes reveals that weekly on-chain exchange flow, a metric used to measure the movement of Bitcoin from exchanges to private wallets and vice versa, suggesting the net accumulation or sales of the token, reveals a negative exchange flow of approximately $250 million. This means $250 million worth of Bitcoin was taken off exchanges, suggesting demand for BTC.
Year-to-Date, Bitcoin is currently down over 16%. Investors will look towards Wednesday, where the United States’ inflation data will be released to get a sense of the direction the entire cryptocurrency space is heading. BTC trades $39,700 as of the time of this writing.