Why is the crypto market falling today? Bitcoin and Ethereum are declining.
On November 9th, the crypto market once again experienced a downturn, with Bitcoin falling below $75,000, while Ethereum traded around $2,100. Concerns over crypto regulation in the United States, the Binance hacking incident, and the withdrawal of institutional funds continued to put pressure on prices.
- Bitcoin trades at $74,584, down 1.4% in the past 24 hours; Ethereum has fallen 4.4% to $2,137, with a weekly decline of 7.4%.
- The Democratic Party's victory in the U.S. mid-term elections has sparked concerns in the market regarding stricter regulations on cryptocurrencies and the prospects for industry support legislation.
- It is reported that the Binance hacking incident, involving $6.34 billion, continues to dampen market sentiment. After the exchange resumed services, customers have withdrawn billions of dollars in funds.
- On November 5th, the total net outflow of spot Bitcoin and Ethereum in the United States was $530.1 million, indicating weakening institutional demand.
- The decline in U.S. tech stocks, along with employment data that exceeded expectations, has also put pressure on cryptocurrencies, prompting investors to re-evaluate their expectations regarding Federal Reserve interest rates.
During the late-night trading session on Sunday, Bitcoin and Ethereum fell to their lowest levels since August, as investors reacted to the results of the U.S. mid-term elections and recent security concerns.
At the time of writing this article, Bitcoin was trading at $74,584, showing a decline of 1.4% in the past 24 hours and 4.9% in the past week. Ethereum experienced an even larger drop, falling by 4.4% to $2,137, with a weekly decline of 7.4%.
Despite the price decline, trading activity remains active. Bitcoin's daily turnover is close to $21 billion, while Ethereum's is around $10.5 billion.
The results of the U.S. mid-term elections have raised concerns about crypto regulation
One of the main reasons for the decline in the crypto market this round is that the Democratic Party achieved victories in both houses of Congress during last week's mid-term elections in the United States.
This result has investors worried that legislators may push for stricter regulations on cryptocurrencies and slow down the legislative process that the industry has been advocating for, which aims to establish clearer rules for digital assets.
In the current and the previous election cycles, the crypto industry has spent over $300 million to support candidates from both parties who are friendly to cryptocurrencies.
The administration of U.S. President Donald Trump has always adopted a more lenient attitude towards cryptocurrencies, including lighter law enforcement, establishing strategic Bitcoin reserves, and expanding access to cryptocurrency-related financial products.
The latest election results have made this political environment even more complex, especially as the Democratic Party discusses legislation to reform the structure of the cryptocurrency market and strengthen investor protection.
As previously reported by crypto.news, Democratic lawmakers have discussed expanding the regulatory scope of the U.S. Securities and Exchange Commission (SEC) as part of their plan to regulate that industry.
Binance Hacker incidents continue to suppress market sentiment
The market is still struggling to recover from the Binance security vulnerability that occurred on October 29th. This incident resulted in the theft of approximately $6.34 billion in cryptocurrencies from exchanges.
This incident is considered one of the largest financial thefts on record and has raised concerns in the market regarding the security of exchanges and the custody of digital assets.
Binance indicates that customer losses will be compensated, and withdrawals will be re-enabled after a temporary suspension following the discovery of the vulnerability.
After the service was restored, customers withdrew a net amount of $4.72 billion, which is equivalent to approximately 2.8% of the assets held by the platform.
The Federal Bureau of Investigation (FBI) attributed this attack to hackers associated with North Korea, while Binance indicates that efforts are being made in collaboration with industry partners to track down and freeze the stolen assets.
Blockchain analysis firm Santiment subsequently reported that a large amount of Bitcoin flowed out of wallets associated with Binance. As of November 5th, approximately 28,316 BTC were transferred from these addresses.
The company also found that after the hack incident, the social sentiment regarding Bitcoin significantly deteriorated, with the ratio of positive to negative comments being only 0.37 to 1.
Bitcoin and Ethereum ETF Capital Outflows Intensify Downward Pressure
During the recent market downturn, institutional demand has weakened, and spot Bitcoin and Ethereum exchange-traded funds (ETFs) listed in the United States (ETF) have experienced significant outflows of funds.
According to fund flow data, on November 5th, there was a total net outflow of $530.1 million for these two types of products.
Among them, Bitcoin ETF saw a net outflow of $430.2 million, while Ethereum funds experienced an outflow of $99.9 million.
AMINA Bank Derivatives Trading Supervisor Andreja Cobeljic considers the cash flow of ETF and the company's Bitcoin purchases as important indicators to measure institutional demand.
In this round of selling, Ethereum's weakness was particularly evident, as it continued to underperform Bitcoin.
On November 6th, a decline in Ethereum triggered liquidations amounting to approximately $210 million, of which $179 million came from leveraged long positions, at a time when the price was near $2,200.
Since then, Ethereum has fallen below that level, while Bitcoin remains close to its recent trading range.
The decline in the U.S. stock market, along with the Federal Reserve's expectations, is also dragging down cryptocurrencies.
The decline in cryptocurrencies coincided with a significant sell-off of U.S. tech stocks, especially those related to artificial intelligence.
Investors are increasingly concerned that the valuation of AI is too high, as well as whether the company will be able to obtain corresponding returns after making large-scale infrastructure investments.
The latest U.S. employment data also makes the prospects for financial markets more complex.
Stronger-than-expected employment data has raised market expectations for the Federal Reserve to raise interest rates again in December, with market pricing indicating that this probability is close to 80%.
After the data was released, the US dollar strengthened, and investors turned their attention to the upcoming inflation data in search of more clues regarding the central bank's next steps.
Asian stock markets and U.S. stock index futures regained some of their losses on Monday, but Bitcoin and Ethereum remained under pressure after the declines over the weekend.
