Crypto Market Bleeds Billions: Bitcoin, Ethereum Plummet Amid Massive Liquidations and Dwindling Inflows

The cryptocurrency market is currently experiencing a severe sell-off, with major assets losing billions in value. At the time of writing, Bitcoin was trading at $88,993, down 7.21% in the last 24 hours. Ethereum, XRP, and Solana were also suffering double-digit losses, with Ethereum down 10% to hit $2,426, XRP dropping by 10.99% to hit $2.21, and Solana losing 12.62% of its value to trade at $139.37.

This sharp downturn has been fueled by multiple factors, including massive liquidations, dwindling capital inflows, and increasing risk aversion among investors. Let's delve into the key factors driving this market meltdown.

Massive liquidations and the Bybit hack have triggered a $150 billion market sell-off. In just one hour, the crypto market saw $340 million liquidated, with over $150 billion erased in the last 24 hours. This extreme volatility has led to widespread panic selling, resulting in steep losses across the board. Compounding the crisis, the Bybit hack on 21 February 2025 dealt a massive blow to investor confidence, with the exchange suffering $1.4 billion in losses, making it the largest financial heist in history. With investors withdrawing funds from exchanges to avoid exposure, liquidity is drying up and fueling the sell-off.

Another alarming factor is the dramatic decline in capital inflows. According to Ali Martinez, inflows into the crypto market have plummeted by nearly 50% in the last 10 days, shrinking from $52 billion to $26.5 billion. This decline means fewer new funds are entering the market, making it harder for assets to rebound from steep losses. Without strong inflows, liquidation cascades accelerate, leading to deeper market crashes.

At the same time, investors are shifting away from risky assets like Bitcoin as volatility spikes in traditional markets. For example, the Volatility Index (VIX) surged by 21.74% in just five days, signaling uncertainty in global financial markets. Historically, when risk appetite diminishes, investors dump speculative assets, worsening the crypto market’s downturn.