The crypto market bounced back on Friday after a strong rebound on Thursday.
Conclusion
- The crypto market backed off part of its recent gains after BTC faced a $74,000 rejection.
- Concerns about an options expiration event and capital flows into traditional safe-haven assets also dampened demand for risk assets.
After a nearly 5.5% increase the previous day, the global crypto market capitalization fell once again, falling 2% to $2.48 trillion on Friday, March 6. Bitcoin (BTC) fell 1.8% on the day, while Ethereum (ETH) lost 1.3%. Other major cryptocurrencies such as BNB (BNB), XRP (XRP) and Solana (SOL) also suffered similar losses as the broader market cooled.
When the price of crypto fell, it led to the liquidation of traders with highly leveraged positions in the leveraged markets. Data from CoinGlass shows that about $167.5 million of the total liquidations of $252 million that occurred in the last 24 hours came from long positions.
Amid the market decline, the crypto fear and greed index fell 4 points to 18, indicating that risk sentiment among investors is evaporating.
The crypto market fell after Bitcoin hit a rejection of $74,000 on Thursday after gaining more than 16% in the last 5 days. This came as investors took profits, which is common after assets have rallied for several days.
Bitcoin’s rejection and successive declines alienated highly leveraged traders, setting off a cascade of liquidations that then spread to other altcoins in leveraged markets.
Several analysts point out that the rejection left BTC more vulnerable to the downside and reduced the short-term outlook for the sector as a whole.
Today, the $2.68 billion option expires
Another major reason for the market decline is the fear of the expiration of $2.68 billion worth of options in the crypto market on the Deribit exchange at 8:00 UTC.
It is worth noting that about 32,000 bitcoin contracts with a notional value of $2.2 billion will expire at a maximum price of $69,000. At the same time, $397 million worth of Ethereum options will also be settled today.
Such an options expiration event usually results in significant price volatility as traders adjust or close out their positions. Over the past 24 hours, open interest in the overall crypto market has fallen by 4.76%, suggesting that traders are hedging their bets ahead of a possible price move.
Rising energy prices are driving a shift to traditional safety net assets
The crypto market also closed global supply chains amid rising energy prices following Iran’s alleged attack on US oil tankers around the port of Hormuz.
Investors fear that rising oil and gas prices due to the conflict could reignite inflation. As a result, they face risk as they shift capital into traditional safe-haven assets, such as gold, which have performed significantly better in these uncertain times.
Crypto legislation has been stopped
Investor sentiment was also hurt again after progress was made on the CLARITY Act, a long-awaited US market structure bill.
While US President Donald Trump called for swift implementation of the framework, the landmark bill hit a new deadlock after leading banking groups rejected a White House deal for the project, citing risks to traditional institutions.
The delay raised serious doubts about whether the CLARITY Act could pass before the 2026 summer recess, removing a major regulatory headwind for the industry.
Disclosure: This article does not provide investment advice. The content and materials on this page are for educational purposes only.
