The price of bitcoin tanked by 4.1% on Wednesday, reaching $56,600 in the last 24-hour period. Similarly, the value of ethereum, the world’s second-largest cryptocurrency by market cap, dropped to $2,400, reflecting a 4.3% drop, according to Decrypt.

Market liquidations for crypto have surged in the last 24 hours, hitting nearly $200 million, Coinglass data shows. These liquidations contain $168.38 million of long positions, and $30.47 million of short positions.

On September 3, spot bitcoin exchange-traded funds (ETFs) also saw their fifth day in a row of losses, amounting to $287.8 million in negative flows. Spot bitcoin ETFs now hold a total net asset value of $52.7 billion, SoSo Value data shows.

Similarly, spot ethereum ETFs logged $47.4 million in cumulative net outflows, led by Grayscale's ethereum ETF, which recorded losses of $52.3 million. Overall, ethereum ETFs now have net assets of $6.7 billion. Last month also represented the lowest monthly performance for the asset since the implosion of FTX in 2022.

Although there are multiple reasons for the underperformance of bitcoin and crypto ETFs, the Nvidia stock recently saw almost $300 billion erased from its market capitalization, making investors less likely to pursue riskier assets like crypto. Moreover, since the bitcoin halving this April cut miner profits by reducing miners’ rewards in half, mining firms are more likely to charge more for bitcoin, adding to higher prices for bitcoin.

“QCP's Volatility Momentum Indicator (VMI) has been triggered this morning for both [bitcoin] and [ether], indicating that the market is entering a period of heightened volatility,” trading firm QCP Capital said.