Huge leverage was unleashed in the biggest crypto and bitcoin market move in months. As a result, liquidations have spiked and the market cap has plummeted by about $100 billion in the last 24 hours.
After months of record-low volatility and tight trading ranges, Bitcoin has made a big move, and it’s down.
Bitcoin falls to 9-week low
BTC plunged 10% to a nine-week low of $25,649 during Friday morning’s Asian trading session. Bitcoin has not reached this price level since mid-June, when markets plummeted following multiple SEC lawsuits.
Additionally, the asset is now trading at $26,426 after falling 7.5% in the 24-hour period.
Glassnode reported that there has been “extraordinary leverage” in the bitcoin futures markets.
“Over $220 million in bitcoin long liquidations have occurred and options implied volatility has more than doubled from 24% to over 55%.”
Total future BTC liquidations. Source: X/@glassnode
According to Coinglass, there have been more than $1 billion worth of liquidations in the last 24 hours.
Over 80% of crypto liquidations were long positions totaling $829 million as 173,500 traders were liquidated.
Crypto liquidations 24 hours. Source: Coinglass
Total market cap is down 6.7% to $1.09 trillion, its lowest level since the mid-June plunge. However, zooming in on the chart shows that markets are still trading within their range channel that has been running sideways since mid-March.
Analysts have observed that Bitcoin usually crashes at this point in the year leading up to its halving. “As mentioned, the average return of BTC in August of the pre-halving years was -21.3,” said ITC’s Benjamin Cowen.
Why have the crypto and bitcoin markets plummeted?
There are several potential triggers for the market crash circulating on cryptocurrency social media. One of them is that Elon Musk’s Space X has sold its BTC holdings.
On Aug. 17, The Wall Street Journal reported that SpaceX had $373 million worth of bitcoin holdings on its balance sheet last year, but has since written off the value and sold the assets.
Other factors include this week’s Fed minutes, which suggest the central bank may want to keep rates higher for longer. This would fuel a market correction that is also taking place in US and Asian equities.
There are several other market influencing factors such as the completion of institutional accumulation. Additionally, miners are increasingly selling their BTC holdings.
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