Bitcoin and Ethereum plunge as crypto sell-off returns

Bitcoin and Ethereum faced heavy selling pressure at the outset of the new month, reigniting volatility across digital-asset markets. The renewed sell-off erased recent tentative gains and pushed risk sentiment lower as traders and investors shifted toward safer assets. Market participants cited a mix of profit-taking, shifting macro indicators and derivative market dynamics as contributors to the sharp moves.

Cryptocurrency exchanges showed increased order-book activity and order cancellations as longs were pared back and volatility spiked. Traders pointed to elevated liquidations in futures and options markets that can amplify price declines when momentum flips. At the same time, broader macro developments — including renewed concerns about economic growth, changes in interest-rate expectations and rotating flows in traditional markets — appeared to feed into crypto risk-on/off cycles.

Altcoins broadly followed Bitcoin and Ethereum lower, reflecting the correlated nature of the crypto complex during episodes of stress. On-chain metrics and exchange flow data suggested higher outflows and reduced accumulation by some custody providers, while stablecoin balances and trading volumes hinted at cautious repositioning by institutional and retail participants.

Analysts and strategists cautioned that such episodes are common in an asset class still establishing its market structure and depth. "Cryptocurrency prices remain sensitive to macro headlines and liquidity conditions," one analyst said, noting that technical support levels and funding rates in derivatives markets will be closely watched by momentum-driven traders.

For longer-term investors, the sell-off underlined the importance of risk management and diversified exposure. Some market observers said the pause in price discovery could present selective buying opportunities for those with appropriate risk tolerance, while others urged caution given persistent uncertainty around regulatory developments and monetary policy.

The story remains fluid: exchanges, over-the-counter desks and market-makers reported elevated activity, and participants said volatility might persist until clearer signals emerge from macro data and policy forums. The current pullback serves as a reminder that the crypto market can swiftly reverse direction, and that both short-term traders and longer-term holders should prepare for rapid shifts in sentiment and liquidity. (Source: CNBC Top News)