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Why is the cryptocurrency market down today?

Why is the cryptocurrency market down today?

The cryptocurrency market woke up red on Monday, September 11, in what is expected to be a high volatility week, while crypto traders are trying to price further events amid $3 billion sell-off threats by the FTX and macroeconomic impacts within the CPI data, both happening on September 13.

Data from QuantifyCrypto shows all top 50 projects with a negative performance for the day as the total cryptocurrency market cap lost over $10 billion in today’s daily candle, for an accumulated loss of close to 2% in the last 24 hours.

Cryptocurrency market down in red.
Heatmap: Top 50 cryptocurrencies by market cap. Source: QuantifyCrypto
Heatmap: Top 50 cryptocurrencies by market cap. Source: QuantifyCrypto

FTX dump on the horizon

There is $3.4 billion in crypto assets held by FTX waiting to be liquidated in batches of $100-$200 million per week, according to an awaiting decision from the Delaware Bankruptcy Court to happen on September 13 (Wednesday).

If FTX gets the approval for the sell-off, the details will be settled on the size and frequency of liquidations in order to minimize possible negative effects on the market, which is already trying to price further effects of such a massive token dump.

According to Aaron Bennett (@AaronDBennett) on X, FTX has nine different cryptocurrencies waiting to be liquidated, with their respective amounts going from $29 million in XRP to $685 million in SOL:

  • $685 million of Solana (SOL)
  • $529 million of FTX token (FTT)
  • $268 million of Bitcoin (BTC)
  • $90 million of Ethereum (ETH)
  • $67 million of Aptos (APT)
  • $42 million of Dogecoin (DOGE)
  • $39 million of Polygon (MATIC)
  • $35 million of BitDAO (BIT)
  • $29 million of XRP token (XRP)

United States CPI data

Interestingly, on the same day of the expected ruling by the Delaware Bankruptcy Court on FTX assets sell-off, the world will get to know August’s US CPI data, which has been driving the Federal Reserve decisions on interest rates, that directly affects both the cryptocurrency and the stock markets.

With an expected CPI of 3.6%, versus last month’s results of 3.2%, it is possible that the crypto market is already pricing what could be another increase in interest rates.

However, it is important to note that although the year-over-year (YoY) August CPI is expected to increase by 40bps over the July YoY CPI, the data known as Core CPI is the one being mostly considered by the Federal Reserve when making the latest decisions.

In this context, the Core CPI is expected to come lower than last month’s, with an expected result of 4.3% core CPI in August, versus the 4.7% core CPI from July. Explaining why the market is majorly not expecting any increases in the interest rates on September 20.

Target rate probabilities for 20 SET 2023 fed meeting. Source: CME Group

All things considered, it is possible the cryptocurrency market could be overreacting in anticipation of a week filled with some important news and decisions. Further price action will be decided as traders and investors are able to better digest the threats and opportunities that are yet to come in the following days.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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