The crypto market pulled back on Friday following a strong rebound on Thursday.

After rallying nearly 5.5% over the past day, the global crypto market capitalization once again retracted, dropping 2% to $2.48 trillion on Friday, March 6. Bitcoin (BTC) was down 1.8% in the daily timeframe, while Ethereum (ETH) posted losses of 1.3%. Other major cryptocurrencies, such as BNB (BNB), XRP (XRP), and Solana (SOL), also faced similar losses as the broader market cooled.

As crypto prices fell, it triggered the liquidation of traders with highly leveraged bullish positions across leveraged markets. Data from CoinGlass shows that nearly $167.5 million of the total $252 million liquidations that took place in the past 24 hours came from long positions.

Amidst the market drop, the crypto fear and greed index fell by 4 points to 18, a sign that risk-on sentiment among investors seems to be evaporating.

Bitcoin faces rejection at $74K

The crypto market fell after Bitcoin faced rejection at $74,000 on Thursday after rallying over 16% in the past 5 days. This came as investors booked profits, which is quite common after an asset has rallied over multiple days.

Bitcoin’s rejection and successive drop caught highly leveraged traders off guard, triggering a cascade in liquidations which then rippled off to other altcoins in the leveraged markets.

Multiple analysts note that the rejection has left BTC vulnerable to more downside and has dampened the short term outlook for the entire sector.

$2.68 billion options expiry today

Another key reason why the market slipped lower today is fears surrounding a $2.68 billion options expiry across the crypto market on the Deribit exchange at 8:00 a.m. UTC.

Notably, around 32,000 Bitcoin contracts with a notional value of $2.2 billion are set to expire with the max pain price at $69,000. Concurrently, Ethereum options worth $397 million will also settle today.

Such a massive options expiry event typically leads to significant price volatility as traders adjust or close out their positions. The open interest of the total crypto market has dropped 4.76% over the past 24 hours, suggesting traders seem to be unwinding their bets ahead of the potential price swings.

Rising energy prices spark rotation to traditional safe-haven assets

The crypto market also tanked amid rising energy prices after Iran’s suspected attack on U.S. oil ships around the port of the Strait of Hormuz disrupted global supply chains.

Investors fear that rising crude oil and gas prices due to the conflict could reignite inflation. Consequently, they have turned risk-averse as they rotate capital towards traditional safe-haven assets such as gold, which has performed significantly better during these uncertain times.

Stalled crypto legislation

Investor sentiment was also hurt after progress on the CLARITY Act, a highly anticipated U.S. market structure bill, stalled once again.

While U.S. President Donald Trump has called for a swift implementation of the framework, the landmark bill hit a new impasse after leading banking groups rejected a White House compromise for the bill, citing risks to traditional institutions. 

The delay has cast severe doubt on whether the CLARITY Act can pass before the 2026 summer recess, removing a major regulatory tailwind for the industry.