Rising interest-rate fears, fund outflows and forced selling of borrowed bets have pushed bitcoin well below where many ETF investors bought in.
Bitcoin had a rough week. The largest cryptocurrency fell below $82,000 over the weekend, briefly recovered, then slipped again on Wednesday, Oct. 14, after a hotter-than-expected inflation report. By Wednesday afternoon it was trading around $81,800, down about 2% on the day, according to CoinMarketCap data cited by The Crypto Times. Ether fell harder, down about 5% to roughly $2,437.
A weekend wave of forced selling
The slide started with leverage, which means borrowing money to make bigger bets. When prices fall, exchanges automatically close leveraged positions that can no longer cover their losses. That's called a liquidation, and it adds more selling to an already falling market.
In the 24 hours through Oct. 12, about $771 million in leveraged crypto positions were liquidated, according to CoinGlass data reported by The Block, and about $686 million of that came from traders betting on higher prices. Bitcoin fell 2.8% to around $81,400 during that stretch.
Fund outflows and a strong dollar
Big investors have also been pulling money out. U.S. spot bitcoin exchange-traded funds, which let people own bitcoin through a regular brokerage account, saw about $679 million to $681 million in outflows in the week ending Oct. 9. Flows were mixed after that, with $65 million leaving on Oct. 12 and about $176 million coming back in on Oct. 13.
Analysts also point to the bigger financial backdrop. A strong U.S. dollar and Treasury yields above 5% make safer investments more attractive and raise borrowing costs, which tends to hurt riskier assets like crypto. One estimate cited by the Bitcoin Foundation puts the average purchase price of bitcoin ETF holders around $84,340, meaning many of those investors are now sitting on losses.
Inflation adds to the pressure
Wednesday's Consumer Price Index showed prices up 3.7% from a year earlier, higher than expected, with gasoline up 9.1% in September alone. The Federal Reserve already raised its benchmark rate in September to a range of 3.75% to 4.00%, and the hot report raised the odds of another increase at its Oct. 27–28 meeting, according to CME FedWatch data. Higher rates generally weigh on crypto prices. Another $331 million in positions were liquidated in the 24 hours after the report.
What this means for your wallet
Crypto's big swings are a feature, not a bug. A 2% to 5% move in a day is normal for bitcoin and even more common for smaller coins. If you own crypto, it's wise to keep it to an amount you could afford to see drop sharply without affecting your bills or emergency savings.
The weekend's liquidations are also a warning about leverage. Borrowing to buy crypto can wipe out your entire stake in minutes when prices move against you. For most people, buying only with money you have, and avoiding margin or high-leverage products, is the safer approach.
If you're investing for the long term, some people use dollar-cost averaging, buying a small fixed amount on a regular schedule, so they don't have to guess the bottom. And always use reputable platforms with strong security.
This article is for education only and is not financial advice. Everyone's situation is different.
Content on The Evergreen Edit is for educational and informational purposes only and is not individualized financial, investment, tax or legal advice. Learn more.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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