Analysis: Multiple factors have led to the decline in the cryptocurrency market today, including heightened risk aversion and outflow of ETF funds

PANews reported on April 2nd that Cointelegraph analyzed the reasons for today's cryptocurrency market decline: 1. Rising risk aversion: Stronger-than-expected US manufacturing data reduced market bets on the Federal Reserve easing monetary policy, leading to a drop in Bitcoin and other cryptocurrency markets today; It is worth noting that on April 1st, the Institute for Supply Management reported a 2.5% growth in its manufacturing index, marking the first expansion since 2022; This data reflects reduced expectations for Fed policy easing, with pricing of interest rate swaps falling to around 65 basis points this year; The decrease in expectations for policy easing, coupled with beliefs that recent interest rates will remain high, led to a significant increase in the yield of benchmark 10-year US Treasury bonds from 4.18% to 4.33%; When bond yields rise due to expected inflation or rate hikes, investors seek higher returns, which typically indicates strong economic conditions or tighter monetary policies; This situation usually reduces risk appetite and prompts investors to avoid higher-risk assets such as cryptocurrencies.

2. Outflow of spot Bitcoin ETF funds reappears: Today's decline in the cryptocurrency market coincides with a decrease in inflows into US spot Bitcoin exchange-traded funds (ETFs). According to data provided by Farside Investors, these funds processed redemptions worth $85.7 million on April 1st; The reduction in inflows into Bitcoin ETFs indicates decreased investor risk appetite.

3. Overbought pullback: Today's decline in the crypto market is part of a broader retracement action starting from March 14th when the market reached a local peak of around $2.72 trillion. This retracement occurred after weekly Relative Strength Index (RSI) levels exceeded overbought levels above 70, signaling overvaluation and weakening trader interest. Additionally, historical resistance between $2.57-$3.02 trillion also limited upward attempts by the market.
At the same time, Unrealized Net Profit/Loss (NUPL) indicator sharply rose into "Belief" territory - historically NUPL values rarely stay unchanged after exceeding 0.6 and often lead to significant price adjustments thereafter.
Therefore, following an evident retracement in March suggests that a more widespread downtrend may have already begun.

4.Long liquidation intensifies selling pressure: The sharp drop in cryptocurrency prices triggered significant long liquidations in derivative markets catching bullish traders off guard and resulting in rapid forced closures of long positions.In just one day there were over $428 million worth of positions forcibly closed out within crypto markets where long positions accounted for approximately $343 million。