Why is the crypto market down today?

The cryptocurrency market is down today, with the total market capitalization falling by 8.7% to $2.17 trillion in the past 24 hours.

Bitcoin (BTC), the largest cryptocurrency by market capitalization, is leading the decline by falling 7.5% in the last 24 hours to reach around $62,160 on April 14. Ether (ETH), the second-largest crypto, has dipped 10.6% to trade around $2,900 in the same period.

TOTAL crypto market capitalization vs. BTC/USD and ETH/USD daily performance chart. Source: TradingView

Israel-Iran conflict spurs risk aversion

The crypto market’s recent 24-hour downturn is part of a broader correction that began on April 12. This period has coincided with escalating tensions between Iran and Israel following Iran’s launch of attack drones and missiles in retaliation for an Israeli strike in Syria.

Risk-on traders exercised extreme caution in the hours before and after the attack, moving capital away from riskier markets like crypto and seeking safety in safer havens like the U.S. dollar.

Source: X

Consequently, the U.S. dollar, which measures the greenback’s strength against a basket of top foreign currencies, has appreciated by 0.79% since April 12.

DXY daily price chart. Source: TradingView

The crypto market is stabilizing on April 14, taking cues from Iran’s confirmation that it had concluded its military operations against Israel. Meanwhile, many analysts are confident that the market’s decline is “normal” and that it will soon resume its uptrend.

Source: X

Nearly $2.5 billion worth of crypto positions liquidated

Since April 12, the crypto market has witnessed liquidations worth about $2.5 billion, including approximately $964 million worth of liquidations in the last 24 hours alone. Notably, long liquidations have significantly outnumbered short liquidations.

Total crypto market liquidations in the last 24 hours. Source: Coinglas

A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side, primarily due to growing euphoria around Bitcoin ETF inflows and the Bitcoin Halving 2024.

Related: $250K Bitcoin? Tim Draper says halving, Bitcoin ETFs will drive…

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