Crippling $1 Billion Crypto Liquidation: Markets in Turmoil, Caution Urged

An abstract representation of a turbulent cryptocurrency market, filled with shades of deep reds and blues, contrasting shapes represent Bitcoin and Ether coins falling starkly in a stormy market. An art nouveau style with a somber emotional tone, the picture is lit with harsh lights to emulate the sudden market crash, showing the frenzy of countless traders amid the chaos.

A recent slump in prices of Bitcoin and Ether has led to a commotion in the cryptocurrency market, with an estimated $1B of value being liquidated. The market dip saw Bitcoin decrease by 7.5% to $26,331 and Ether by 6.12% to $1,679, triggering a series of liquidations that affected thousands of derivative traders.

The sudden downturn led to large-scale liquidations, resulting in the loss of billions of dollars in hedged positions. According to data from Coinglass, 176,752 traders were liquidated in the past 24 hours, with a whopping 90% of these liquidations occurring within the past 12 hours. These recent actions underlined an unforeseen rise in price volatility, staggeringly manifesting just days after Bitcoin and Ether recorded their lowest daily volatility in years.

The impact of the market dip wasn’t singular. A couple of colossal liquidations emerged, seizing the attention of the crypto community. On Binance‘s ETHBUSD contract, a trader was liquidated at $1,434.37, incurring a loss of $55.9211 million – the day’s largest liquidation. Another trader lost nearly $10 million due to liquidations on the BTCUSDT contract.

Numerous factors can be accounted for this downtrend in the crypto market. The write down of Bitcoin by SpaceX, the prevailing macroeconomic scenario, as well as the tendency of Bitcoin and Ether to periodically range-trade have been contributory. Bitcoin managed to maintain the $28,000 support for several months, while Ether held the $1,500 support until yesterday’s capitulation.

Despite this, the crypto market has been witnessing an overall decline in liquidity. Major crypto exchanges, like Coinbase, have reported a significant dip in their trading volumes. This $1 billion liquidation marks the largest crypto liquidation event in the past eight months, cascading from the collapse of FTX.

In contrast, Securitize, a tokenized asset firm, is reportedly expanding investor access to private market alternative assets via the acquisition of crypto fund manager Onramp. The latter manages more than $40 billion in assets. Hence, while the recent market slump has undoubtedly raised eyebrows, it also encourages intuitive steps toward sector diversification.

However, the current situation also implies that the cryptosphere remains unpredictable. While it has the propensity of enticing significant rewards, the potential risks are just as high. The prominent message thus remains, exercise caution and do your own research before diving into the expansive universe of cryptocurrency.

Source: Cointelegraph

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