Crypto markets sank again on Friday morning, with $1.2 billion in leveraged positions liquidated.

Bitcoin exchange-traded funds saw outflows of over $500 million the day prior, while users on Binance pulled $185 million off the exchange.

“Bitcoin’s recent drop is largely driven by macro stress, ”Illia Otychenko, lead analyst at the CEX.IO exchange, told DL News.

Global trade tensions, the US government shutdown in Washington, and continuous outflows from Bitcoin ETFs have all created a “risk-off” environment, he said.

The next critical psychological support level is at $100,000, according to Otychenko.

“If it holds, we could see a stabilisation; if it breaks, the market might need more time to rebuild momentum.”

Still others expressed optimism based on fundamentals.

The long view

Despite this week’s liquidations and price fluctuations, “there is a strong conviction in Bitcoin as a utility asset, not just a store of value,” Dom Harz, co-founder of the BOB blockchain, told DL News.

Short-term price action does not impact Bitcoin’s direction of travel, according to Harz.

“We are likely to see Bitcoin move more in tandem with other financial markets as it moves closer to becoming a core component of the global financial system,” he said.

Brinkism

Last week, analysts at Citrini Research warned that Trump’s trade strategy will remain a key source of volatility for markets overall.

“Trump will repeatedly bring us to the brink – progressively heightening trade tensions, but utilising shiny objects and promises of deescalation or stimulus in an attempt to prevent collapse,” Citrini Research said in a note to investors.

Meanwhile, traders are also looking forward to the US Federal Reserve’s next policy meeting on October 29.

CME Group’s FedWatch tool gives a 97% chance of a 0.25% rate cut, which would inject more liquidity into the financial system.

Crypto market movers

• Bitcoin is down 6.5% over the past 24 hours to trade at $104,085.
• Ethereum is down 9% over the past 24 hours, trading at $3,697.

What we’re reading

• Bitcoin ‘still qualifies’ for debasement trade as gold towers to fresh record, analysts say — DL News
• Bain Capital, Apollo pile in as crypto companies raise $2.5bn in October — DL News
• Why the Black Friday Whale’s $192 Million Crypto Trade Was Legal — Unchained
• Retail vs Wall Street: Why The Odds Are Stacked Against You — Milk Road
• Tether froze $44m in crypto for the Bulgarian police. A Texas firm is suing to get it back
• — DL News

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email lance@dlnews.com.