Citibank "Investor sentiment rapidly deteriorated due to large-scale liquidations in October"

JH Kim

Summary

Citibank assessed that the large-scale forced liquidations in October had a major adverse impact on investor sentiment in the virtual asset market.
The report said that a slowdown in ETF demand and deteriorating technical indicators combined to erode market confidence and increase volatility.
It also analyzed that worsening liquidity and weakened ETF inflows could lead to continued short-term adjustment.

Citibank said the recent downturn in the virtual asset (cryptocurrency) market stemmed from the large-scale forced liquidations in October and a contraction in investor sentiment.

On the 5th (local time), according to crypto-focused media CoinDesk, Citibank said in a report, "Market confidence was severely damaged after the large-scale liquidation event that occurred on October 10," and "a slowdown in demand for exchange-traded funds (ETFs) combined with deteriorating technical indicators to sharply weaken investor sentiment."

Citibank assessed this liquidation event as "one of the worst forced liquidations on record," and analyzed that, despite short-term rebounds, even long-term holders (LTH) may sell some holdings.

The report also added, "Liquidations occurred in succession amid thinning liquidity in the Bitcoin (BTC) and major altcoin markets, increasing volatility," and "if ETF inflows weaken, short-term adjustments may continue going forward."