Bitcoin (BTC) experienced a sudden and dramatic drop in value today, with its price plummeting to a low of $29,015 on Bitstamp. This sharp decline came just a day after the digital currency had rallied above the $30,000 level, with bulls unable to maintain the momentum. The swift...
Bitcoin (BTC) experienced a sudden and dramatic drop in value today, with its price plummeting to a low of $29,015 on Bitstamp.
This sharp decline came just a day after the digital currency had rallied above the $30,000 level, with bulls unable to maintain the momentum.
The swift price drop of the world’s largest cryptocurrency by market value occurred in a matter of minutes, with Bitcoin shedding $1,000 in just 15 minutes.
This unexpected turn of events marks the lowest BTC has traded since April 10 and highlights the latest challenge for investors seeking upside potential.
While no specific fundamental reason has been identified as the cause of this sell-off, market experts point to a long squeeze as the likely culprit. Over $25 million worth of Bitcoin futures were liquidated during this price decline, with long positions, or bets on rising prices, making up a staggering 98% of the liquidated positions.
As Bitcoin struggled to maintain its value, the wider cryptocurrency market also faced challenges, with major altcoins like Ethereum (ETH) experiencing a 3% drop in value within the past hour.
During this time, Ethereum (ETH) saw an even greater liquidation volume compared to Bitcoin.
Liquidations occur when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of their initial margin. This typically happens when an investor is unable to meet the margin requirements for a leveraged position and lacks the necessary funds to keep the trade open.
Large liquidations often signal the local top or bottom of a steep price move, allowing traders to adjust their positions accordingly.
Also in the past 24 hours, Polygon (MATIC) and Dogecoin (DOGE) has experienced losses. Solana (SOL), on the other hand, suffered the most significant decline, shedding nearly 9% of its value.
Some market analysts believe that the unexpectedly high U.K. March inflation figure, which exceeded 10%, may have influenced market sentiment.
Vetle Lunde, a senior analyst at K33 Research, commented on the situation:
“The hotter-than-expected U.K. CPI may have weighed over risk assets, including BTC. But the gravity of the reaction has been far far more severe than in other asset classes.”
Lunde added that the sell-off appears to be more of a “leverage wash out,” with Binance open interest in BTCUSDT perpetual contracts falling 5.1% in just 15 minutes.
As the dust settles, traders and investors alike will be closely monitoring the market to see if Bitcoin can recover from this sudden downturn and regain its position above the $30,000 mark.