The cryptocurrency market has experienced a significant selloff over the past two days, resulting in a substantial wave of liquidations across various trading platforms. Bitcoin (BTC), the largest cryptocurrency by market capitalization, declined by 3.5% in the last 24 hours, trading at $67,275. Ethereum (ETH), the second-largest cryptocurrency, saw an even sharper drop of 4.6%, trading at $3,495.

This market downturn led to the liquidation of approximately $270.4 million in leveraged positions over the past 24 hours, according to data from CoinGlass. The majority of these liquidations, amounting to $238 million, were from long positions. Ethereum led the liquidation tally with $70.5 million, of which $64.6 million were long positions, closely followed by Bitcoin, which accounted for $68.88 million in liquidations. Binance emerged as the top exchange for these liquidations, recording $99.7 million.

The market decline comes at a pivotal time, as investors brace for significant macroeconomic updates. Key events include the release of the monthly Consumer Price Index (CPI) report and a Federal Reserve monetary policy announcement, both scheduled for Wednesday. These reports are expected to provide critical insights into the economic outlook, influencing market sentiment and trading strategies.

The heightened correlation between Bitcoin and traditional risk assets highlights that cryptocurrencies are increasingly influenced by broader market dynamics. This relationship is particularly evident as traders adopt more conservative strategies in anticipation of key economic data releases. The drop in implied volatility for both Bitcoin and Ethereum suggests a more cautious market stance, with investors possibly waiting for clearer signals before making significant moves.

The selloff reflects the broader market’s anxiety over upcoming economic indicators and their potential impact on monetary policy. The CPI report and the Federal Reserve’s announcement are particularly crucial as they could indicate the direction of inflation and interest rates. If inflation continues to rise, it may prompt the Federal Reserve to adopt a more hawkish stance, potentially leading to higher interest rates. Such a move could negatively affect risk assets, including cryptocurrencies.

The liquidation of long positions, especially in Ethereum and Bitcoin, underscores the vulnerability of leveraged trading in a volatile market environment. Investors who bet on the continued rise of these assets faced significant losses as prices declined. This situation is a stark reminder of the risks associated with high-leverage trading in the cryptocurrency market.

In conclusion, the recent selloff in the cryptocurrency market, resulting in $270 million in liquidations, underscores the sector’s susceptibility to broader economic forces. With key economic updates on the horizon, market participants are likely to remain cautious, closely monitoring developments that could shape the future direction of cryptocurrencies and other risk assets.