Bitcoin & Ethereum Tumble: What’s Fueling This Latest Crypto Crash?
The crypto market just took another gut punch. Bitcoin and Ethereum, the twin titans of digital finance, are bleeding red again, rattling portfolios and testing the nerves of even the most hardened believers.
Anatomy of a Sell-Off
Forget the usual suspects for a second. This isn't just about a single bad inflation print or Elon Musk's latest tweet. The pressure feels systemic—a cocktail of macro dread, regulatory whispers, and that old ghost, leverage, coming home to roost. It's the market collectively asking a brutal question: what's the real floor?
The Liquidity Squeeze
Watch the order books thin out. When the big players hit pause, the slide gets steeper. It's classic risk-off behavior, where 'digital gold' suddenly trades more like a speculative tech stock. Traditional finance veterans are probably smirking into their lattes right now, muttering about 'told you so' and 'asset-backed securities.'
Not a Crash, a Recalibration?
Here's the bullish counter-punch: volatility is the admission price for this asset class. Every major drawdown has, historically, been a brutal but effective shakeout—flushing out weak hands and over-leveraged positions. The infrastructure being built now is more robust than in 2018 or even 2021.
The path forward is murky, paved with fear and algorithmic trading. But one thing's clear: in crypto, the road to the next all-time high is always paved with a few spectacular potholes. Buckle up.
Why The Bitcoin And Ethereum Prices Are Crashing
The Bitcoin and ethereum prices are down again amid selling pressure from the BTC and ETH ETFs. According to Arkham data, BlackRock deposited 2,292 BTC ($200 million) and 9,976 ETH ($29 million) into Coinbase yesterday, likely to sell these coins. This marked the second time this week that the world’s largest asset manager had sent BTC and ETH to Coinbase in a bid to offload these coins.
Further data from Arkham shows that BlackRock deposited 2,838.78 Bitcoin ($255 million) and 29,928 Ethereum ($91.29 million) into Coinbase on December 22. These sell-offs come as the crypto ETFs continue to record significant outflows. The BTC ETFs have seen a total net outflow of $330 million this week, while the ETH ETFs have a weekly net outflow of $11 million.
This indicates that the institutional interest in Bitcoin and Ethereum is fading at the moment, which provides a bearish outlook for the largest crypto assets by market cap. A CoinShares report released earlier this week revealed that Bitcoin ETFs saw outflows of $460 million last week, while Ethereum ETPs saw outflows of $555 million.
From a macro perspective, the bitcoin and Ethereum prices have also continued to decline as the Fed looks unlikely to cut interest rates at the January FOMC meeting. The recent U.S. GDP and jobless claims reports have sparked a surge in the odds that the Fed will hold rates steady next month.
The Bear Market Risk Is Becoming More Relevant
A CryptoQuant analysis revealed that the bear market risk is becoming more relevant based on the Bitcoin Combined Market Index (BCMI). The BCMI is said to be below equilibrium at the moment but well above historical bottom zones. This suggests that there is still more room for the BTC price to drop to the downside.
The CryptoQuant analysis stated that from a data-driven perspective, this opens the possibility that Bitcoin is transitioning into a bear phase and not just experiencing a pullback. If history repeats itself, BTC is expected to FORM a more durable bottom if the BCMI revisits the 2019 to 2023 levels. The analysis added that this is a scenario worth considering, as at this stage, the market appears to be in a downward transition rather than a completed reset.
Related Reading: Major Ethereum Metric Just Hit A New All-Time High – Can Price Reclaim $3,000?
At the time of writing, the Bitcoin price is trading at around $87,700, down in the last 24 hours, according to data from CoinMarketCap.
