Bitcoin was little changed on Tuesday, extending losses after $1.5 billion in crypto derivatives were liquidated in the previous session.
Bitcoin was little changed on Tuesday, extending losses following the liquidation of $1.5 billion in crypto derivatives during the previous session, as traders braced for further turbulence ahead of one of the largest options expirations in market history.
Investors were also awaiting Federal Reserve Chairman Jerome Powell's speech later in the day, which could provide more clues about the central bank's policy outlook following last week's interest rate cut.
The world's largest cryptocurrency was last trading 0.1% lower at $112,711.6 as of 8:55 AM ET, trading near its lowest level in two weeks.
Crypto selloff wipes out $1.5 billion; Powell speech ahead
On Monday, the coin fell more than 3% below $112,000, but later pared its losses slightly. Coinglass data showed that approximately $1.5 billion worth of cryptocurrency long positions were liquidated on Monday, marking the largest one-day collapse in months.
More than 400,000 traders saw their leveraged bets wiped out, with Ether falling 9% and altcoins like Dogecoin also posting sharp declines.
Reports suggested the selloff was driven by over-positioning and low liquidity, which exacerbated price swings. It was further exacerbated by traders holding directional bets through options contracts, which benefit from sharp swings.
Market participants are also bracing for a major options contract expiration on Friday. According to Deribit, more than $23 billion worth of Bitcoin and Ether options are set to expire, one of the largest expirations ever.
The Federal Reserve is another key factor this week. Chairman Jerome Powell is scheduled to speak later on Tuesday, following Governor Stephen Miran's remarks on Monday, with several other policymakers expected to speak in the coming days.
Last week, the Fed cut interest rates by 25 basis points, and its "point forecasts" indicated two more cuts were likely this year. However, officials adopted a cautious stance, emphasizing that inflation remains above target and that the pace of easing will depend on incoming data.
Investors are also awaiting the release of the US Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure of inflation, on Friday.
China Signals Caution on Tokenized Assets in Hong Kong - Reuters
China's securities regulator has privately instructed some mainland brokerages to suspend their real-world asset (RWA) tokenization activities in Hong Kong, according to Reuters, underscoring Beijing's concerns about the rapid growth of offshore digital asset products.
The guidance, informally provided by the China Securities Regulatory Commission in recent weeks, was aimed at ensuring that firms' requirements are supported by legitimate business practices and strengthen risk management, Reuters reported, citing people familiar with the matter.
RWA tokenization involves converting traditional assets, such as bonds or real estate, into blockchain-based tokens. Hong Kong is promoting this sector as part of its drive to become a digital finance hub, attracting Chinese brokerages eager to launch products.
Cryptocurrency Price Today: Altcoins Hold Off Sharp Losses
Most altcoins traded lower on Tuesday, holding off a sharp decline from a widespread sell-off.
The world's second-largest cryptocurrency, Ethereum, was trading 1.8% lower at $4,190.4, after falling 9% to a one-month low on Monday.
The world's third-largest cryptocurrency, XRP, rose 0.4% to $2.87, after hitting a three-week low in the previous session.
Solana fell 3.8%, Cardano lost 2.2%, and Polygon was down 3%.
Among meme tokens, Dogecoin fell 1.7%, and $TRUMP retreated 5.7%.