Current Pressures on the Crypto Market: $1.22B in ETF Outflows and Rising Concerns

Why crypto is under pressure right now

The cryptocurrency market is experiencing significant pressure due to a combination of decreased liquidity, upcoming token releases, and institutional outflows. As fear dominates investor sentiment, the total market capitalization struggles to recover from lows around $3.7 trillion. Analysts suggest that without changes in demand, further declines may be imminent.

Key Takeaways

A decline in on-chain liquidity, coupled with token unlocks and institutional outflows, is worsening bearish pressure in the market.
The Fear and Greed Index stands at 28, indicating a fearful market atmosphere, which reflects low demand and caution among investors.
The total cryptocurrency market capitalization is around $3.7 trillion and continues to face challenges in rising.
Experts predict a potential for further declines as capital flight may increase in the coming days.

Declining Liquidity and Upcoming Token Unlocks

The overall on-chain liquidity has seen a notable decrease in recent days as sellers re-emerge in the market. The liquidity, which measures the total value of cryptocurrencies locked in various decentralized protocols, has dropped by around $7.94 billion, falling from $157.64 billion as of October 27th.

Onchain volume Source: DeFiLlama

The presence of remaining bullish investors may be tested further as token releases amounting to $310.56 million are anticipated over the next two weeks, adding to the market supply. Specifically, around $51.26 million worth of digital assets is expected to be released between November 1st and 2nd. This overwhelming bearish sentiment has led many investors to reconsider their positions.

Institutional Outflows and Market Sentiment

Institutional outflows have reportedly intensified over the past two days. Data from DeFiLlama indicates that exchange-traded funds (ETFs) related to approved Bitcoin (BTC) and Ethereum (ETH) products have turned negative. Total outflows from October 29th to 30th reached approximately $1.22 billion.

Source: DeFiLlama

Moreover, digital asset treasuries have seen a significant reduction in purchasing activity. After achieving a high of $6.67 billion in weekly purchases at the end of the week of August 11th, purchases have plummeted to just $364.98 million, marking the lowest buying activity since July 28th. This decline in treasury interest points to a weaker demand for digital currencies.

Outlook for the Future

The downward trend in cryptocurrency assets is likely to continue, especially as market anxiety prevails. The Fear and Greed Index currently indicates a “fearful” market with a score of 28, worsening since October 27th.

Fear and Greed Index Source: DeFiLlama

If the market remains in this low range, the likelihood of dwindling demand increases. With an expected surge in supply, the market is poised to remain, at best, stagnant. Presently, altseason indicators suggest that alternative cryptocurrencies (altcoins) are also experiencing bearish conditions, similar to Bitcoin’s current trends.