Friday’s crypto market saw a significant liquidation, driven by escalating tensions between Iran and Israel, as reported by QCP Capital. Geopolitical instability often leads investors to move away from riskier assets like cryptocurrencies and towards more stable investments, resulting in sell-offs across various asset classes.

In the past 24 hours, 261,054 traders were impacted, with $860.82 million in assets liquidated as the overall crypto market cap dropped by almost 5%. According to Coinglass, the liquidation heatmap showed the extent of the impact.

QCP Capital also highlighted the role of the ETH risk reversal indicator in the liquidation process. The firm noted a bearish skew in the Ethereum risk reversal, indicating traders’ expectations of a price drop. This sentiment likely stemmed from using ETH as a hedge against market volatility.

The accuracy of this technical indicator was evident as ETH’s value declined by over 5% to $3100. Speculators holding long positions in altcoins often use ETH puts to protect against downturns, making ETH prices particularly susceptible to market sentiment shifts.

The prevailing fear in the crypto markets was further reflected in the negative swing of perpetual swap funding rates, which plummeted to over -40%. This marked the deepest negative funding rate this year, indicating a strong bearish sentiment. The anxiety also impacted the forward curve, with the front end falling below 10%, suggesting a gloomy short-term outlook for cryptocurrency prices.

Overall, the recent market liquidation was driven by geopolitical tensions and exacerbated by negative market sentiment, highlighting the volatile nature of the cryptocurrency market. It’s important for investors to stay informed and cautious during such turbulent times.

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