On October 23, Beijing time, the Nasdaq Composite Index fell by 2.60%, the S&P 500 Index dropped by 1.21%, and the Dow Jones increased slightly by 0.02%. Technology stocks faced a concentrated sell-off, with the Philadelphia Semiconductor Index dropping by about 6.7%.
The cryptocurrency market was also impacted. Using the closing prices from the day before in the U.S. stock market to this closing, OKX BTC/USDT decreased by about 3.54%, and ETH/USDT declined by about 4.32%.
During this downturn, a more notable change for traders comes from the funding: after a consecutive inflow of BTC spot ETFs, some products experienced redemptions, while contract positions continued to increase. Whether selling pressure has been fully released is not supported by the existing evidence.
Figure 1｜In the same closing window, BTC and ETH had declines exceeding that of the Nasdaq; the cryptocurrency market uses OKX spot data.
Why did technology stocks drop, and how far will the pressure spread?
Concerns about the return on investment in AI are an important backdrop for this round of sell-off.
Meta's cash flow from operations for the third quarter was $32.79 billion, capital expenditures and financing lease principal payments totaled $34.91 billion, and free cash flow was negative $2.12 billion. The company also raised the lower end of its full-year capital expenditure guidance, indicating that subsequent investments will remain high.
When the investment will translate into cash returns becomes a reason for investors to reassess valuations. After the earnings report, Meta's stock price fell by about 7%, and the chip sector was also impacted. During the same period, oil prices rose, further increasing uncertainty in inflation and interest rate prospects.
However, the Dow still managed a slight increase, indicating a divergence within the U.S. stock market. For the cryptocurrency market, the subsequent pressure depends on whether the sell-off in technology stocks spreads and whether investors continue to reduce other risk positions.
The cryptocurrency market adjusts in advance, and ETFs show signs of redemption
Breaking down the trading time, most of the declines for BTC and ETH occurred before the U.S. stock market opened. During the regular trading hours of the U.S. stocks, they respectively dropped by about 0.43% and 0.73%. The cryptocurrency market reflected the risks in advance; relying solely on closing declines makes it difficult to gauge how much selling pressure may follow.
The changes in ETFs provide further clues. Farside data shows that from October 19 to 21, the BTC spot ETF had a cumulative net inflow of about $1.075 billion; on the 22nd, part of the disclosed data switched to a net outflow of $381.5 million, with redemptions mainly coming from FBTC and ARKB. As of this verification, IBIT is pending reporting, and the full-day results may still change.
Figure 2｜After continuous inflow, BTC ETF saw some products redeem; data as of October 22 is not complete.
The previous continuous inflow indicates that there was support in this channel; the appearance of redemptions on the day of the decline means that part of the demand is starting to weaken. What needs to be confirmed next is how long the redemptions will continue.
ETH's funding performance is weaker. From October 19 to 21, its spot ETF had a total net outflow of about $114.5 million, and portions disclosed on the 22nd continued to flow out.
After a round of declines, how much leverage risk has been released?
The signals from contract data warrant caution.
From 21:30 on October 22 to 03:30 the next day, the open interest for OKX BTC-USDT-SWAP contracts increased from about 30,423 BTC to 30,925 BTC, an increase of about 1.65%. During this period, the price of cryptocurrencies fell, yet the market continued to establish contract exposure.
Figure 3｜OKX single contract positions increased by about 1.65%; the arrows indicate direction, with two statistical windows differing by 30 minutes.
This is just a sample from a single contract; the growth in positions cannot alone discern long or short directions. However, it is enough to remind traders: during this round of decline, some positions are still increasing, and understanding the market as "leverage has been cleaned out" requires more evidence.
Spot buying and contract building coexist, making the quality of rebounds especially important. If the rebound is primarily accompanied by an expansion of contract positions and limited confirmation of spot demand, prices will still be susceptible to changes in positions.
For the next round of trading, focus on two signals
First, observe whether BTC can gain support near this round's low point. The above OKX spot sample has a low of about 80,900 USDT, so the area around $81,000 can be seen as a reference for observation. This represents the level at which selling pressure was reached this round; the strength of support will need to be tested by subsequent trades.
Then, check if ETF redemptions continue. If prices stabilize after a pullback and complete subscription and redemption data also shows a slowdown in redemptions, the judgment of easing short-term pressure will be supported. If BTC breaks below this round's low and remains below it at the next U.S. stock market close while ETF continues to experience net outflows, the risks of continued withdrawals should be weighted more heavily.
Judgments regarding ETH and altcoins should be considered after BTC establishes support. This round, ETH saw a larger decline, and ETF funds displayed weakness, and the demand for spreading to other assets is still pending confirmation.
Currently, it is more worthwhile to spend time determining how long the selling pressure will last. A halt in declines among technology stocks can improve the external environment, and whether the cryptocurrency market can stabilize will ultimately depend on what price levels spot funds are willing to take on.
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