Bitcoin fell below $98,  000, intensifying market liquidity tightness and policy uncertainty

Recently, according to The Defiant, the price of Bitcoin dropped below $98,  000, hitting a new low since May this year. Over the past 24 hours, Bitcoin has dropped by approximately 3%, while Ethereum has fallen by 7% during the same period. The overall performance of major cryptocurrency markets has been weak. This price fluctuation occurred after the US government ended the longest shutdown in its history, while inflationary pressure still exists. The interweaving of these factors has exacerbated market uncertainty.

From a financial perspective, as the largest cryptocurrency in the market, the price decline of Bitcoin indicates a tight liquidity situation in the market. Over the past 24 hours, more than $647 million in cryptocurrency positions were liquidated, with long positions accounting for the majority, reaching $519 million, while short positions were liquidated at approximately $128 million. The liquidation amount of Bitcoin was the highest, reaching 234 million US dollars, followed by Ethereum at 187 million US dollars. The cumulative liquidation amount of other types of altcoins exceeded 54 million US dollars. This shows that investors' sensitivity to market fluctuations has significantly increased, especially under the effect of high-leverage positions, where short-term sharp price fluctuations are further magnified.

In terms of exchange-traded funds (ETFs), Bitcoin-related spot ETFs saw an outflow of $278 million in the past day, Ethereum ETFs saw an outflow of $184 million, while Solana ETFs defied the trend and saw an inflow of $18 million. The changes in the flow of ETF funds reflect the divergence in investors' preferences for different crypto assets. The outflows of funds from Bitcoin and Ethereum indicate a decline in risk appetite, while the inflows of funds from Solana may be the behavior of a few investors attempting to capture short-term volatility gains. This differentiation is often regarded as an indicator of risk sentiment fluctuations in the financial market and poses a potential threat to the stability of the macro market.

The total market capitalization of global cryptocurrencies dropped by 2.8% over the past 24 hours, amounting to approximately 3.4 trillion US dollars. Bitcoin still accounts for as high as 57.7% of the total market capitalization, while Ethereum makes up 11.4%, indicating a relatively high market concentration. From the perspective of financial risk management, high concentration means that the price fluctuations of major assets will have an amplification effect on the overall market. When the price of Bitcoin experiences a significant drop, market confidence may be quickly undermined, leading to further price chain reactions and liquidity pressure.

The correlation between cryptocurrencies and traditional financial markets has further strengthened. In this price fluctuation, Bitcoin not only reflects the inherent volatility of its own market, but is also influenced by macroeconomic and policy events. This means that when investors assess the risks of investing in crypto assets, they must take into account the macroeconomic environment and policy risks. Especially against the backdrop of a possible 25-basis-point interest rate adjustment in the United States in December, the price of Bitcoin is likely to fluctuate within the range of $100,000 to $110,000. This policy uncertainty has intensified short-term price fluctuations and restricted investors' pursuit of higher returns.

On the other hand, the market performance of altcoins is more volatile. For instance, XRP briefly rose by nearly 5% after Canary Capital launched the spot ETF, but eventually still dropped by 2%. Solana dropped by 7% and BNB fell by 4%, indicating that small-cap assets are more vulnerable to sharp fluctuations under changes in market sentiment. This volatility means that financial institutions and individual investors need to carefully assess the use of leverage and position management to avoid unnecessary losses in the face of sharp market fluctuations.

Overall, Bitcoin's fall below $98,  reflects the vulnerability of the cryptocurrency market in the current macroeconomic environment. The tight market liquidity, the liquidation of leveraged positions, changes in the flow of ETF funds and policy uncertainties are intertwined, exerting multiple pressures on prices. Investors should remain cautious in a highly volatile environment and fully consider the risk transmission effect brought about by market concentration. This incident indicates that the cryptocurrency market is not only an object of financial speculation but also needs to be incorporated into the framework of macroeconomic analysis. Investors must take liquidity risk, policy risk and market concentration factors into the decision-making process all at once.