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The cryptocurrency market experienced a sharp downturn, with its total market capitalization falling 2.51% to $3.07 trillion in 24 hours.
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The sell-off was driven by leveraged traders rapidly exiting positions amid a historic surge in gold prices, highlighting a classic flight to safety.
Bitcoin and Ethereum Lead Decline Amid Risk-Off Sentiment
Major cryptocurrencies led the losses, with Bitcoin price dropping over 2.2% to around $90,000 and Ethereum falling 3.51% to trade just above $3,000.
The downturn coincided with gold hitting a record high of $4,701 per ounce, fueled by geopolitical tensions and fears over U.S. trade policies under President Donald Trump.
Derivatives Data Reveals Mass Leverage Unwinding
Market data confirms a significant deleveraging event. While crypto derivatives volume spiked 39%, open interest fell 4.5%, indicating widespread position closures.
Bitcoin saw $8.1 million in liquidations, predominantly long positions, as traders fled risky assets.
Inverse Correlation Hits Multi-Month High
The 24-hour correlation between crypto and gold reached -0.89, its strongest negative link in months.
Analysts note that sustained gold strength or escalating trade tensions could prolong pressure on digital assets,. This is so as capital rotates from high-risk crypto into perceived safe havens.
Project-Specific Sell-Offs Amplify Losses
The decline was exacerbated by token unlocks flooding the market with new supply.
Assets like Merlin Chain (MERL) plummeted 21%,. They demonstrated how scheduled vesting events can trigger sharp sell-offs when sentiment is already weak.
