As an analyst with over a decade of experience in the financial markets, I have witnessed numerous bull and bear cycles, from traditional stocks to cryptocurrencies. The recent liquidation events in the crypto market, particularly the one on October 23, are reminiscent of similar occurrences during the dot-com bubble and the 2008 financial crisis.
As a crypto investor, I found myself grappling with another tough day in the market yesterday, as approximately $300 million in value was wiped out within a 24-hour span. Upon closer examination using data from CoinGlass, it became evident that traders carrying long positions were hit the hardest. This massive liquidation event, one of the largest this October, has left an indelible mark on the crypto world.
On October 23, these traders experienced an overall loss of approximately $194 million, with short sellers experiencing a more modest liquidation of nearly $79 million, resulting in a total loss of $272 million. It’s important to note that the last time such a significant market liquidation occurred in the crypto industry was on October 3, when the bears took control, causing the bulls to sustain losses. At that time, Coinspeaker reported that around $556 million in leveraged positions were forcibly closed.
Market Decline Hits Ethereum and Bitcoin Hard
Ever since the October 3 incident, there’s been a continuous surge in liquidations within the cryptocurrency market. This is because traders are making bets on the possible price movements of various digital assets.
Recently, Bitcoin (BTC) plunged unexpectedly to $67,000 from its previous high of approximately $69,500 – a level not seen for months. This rapid price change took investors off guard, as many had speculated that the digital currency would surpass $70,000. As a result, roughly $135 million in leveraged positions were liquidated.
Over the past 24 hours, the downward trend in the financial markets triggered a fresh round of liquidations on October 23, impacting traders dealing with various cryptocurrencies like Bitcoin and Ethereum. As market volatility increased, the price of ETH stood at $2,522, while its 24-hour volatility was approximately 2%. At present, Ethereum boasts a market capitalization of around $303.91 billion, with a trading volume of $18.20 billion over the last 24 hours.
In the last day, Ethereum traders experienced significant losses due to market downturn, with approximately $80 million worth of positions being liquidated. According to CoinGlass, long-term traders suffered over $61 million in losses, whereas short sellers endured a comparatively smaller loss of around $16 million.
In the Bitcoin market, the overall sum of funds liquidated slightly surpassed $58 million yesterday. Notably, it was the long-term traders who bore the brunt of these losses, with an estimated $30 million wiped out in a single day. Conversely, short-term traders experienced about $27 million in liquidations.
Concerns Over Bitcoin’s Future Movement
Currently, long-term traders are experiencing substantial losses, and some market experts caution that Bitcoin’s strong upward trend might be slowing down. Analysts such as XBTManager suggested last week that for Bitcoin to surpass the $70,000 mark once more, there should be an increase in demand on trading platforms like Binance, OKX, KuCoin, Bybit, and Bitget.
As he explains, the primary cryptocurrency is right now experiencing what he calls a “resistance” period, which means it needs to transition into a “decision” phase in order to keep its upward trajectory.
Additionally, he pointed out that even with its recent increase, Bitcoin may encounter hurdles which could potentially lower its value back to around the $63,000 to $64,000 mark.
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2024-10-24 12:06