Key Points
- Bitcoin’s price drop below $60,000 triggers nearly $300M in crypto liquidation.
- The liquidation frenzy coincides with the upcoming Bitcoin halving event in 2024.
The cryptocurrency market experienced a significant blow in the early hours of Friday. This was due to reports of a worsening crisis in the Middle East, causing the price of Bitcoin (BTC) to slip from $60,000 to $59,000 for the first time in weeks.
Although Bitcoin has slightly bounced back and is currently trading above $64,000, the tumble led to substantial liquidation. This resulted in a single-day loss of over $282 million, as per data from CoinGlass. This liquidation affected numerous traders, with the total amounting to $89,363.
Impact on Crypto Traders
In the past 24 hours, short traders suffered losses exceeding $132 million, while long traders experienced a total loss of $150 million. CoinGlass data also revealed that $172 million was liquidated from leveraged positions within just an hour as Bitcoin continued to surpass traders’ expectations.
When it comes to losses across different blockchain networks, Bitcoin traders were hit the hardest, with $4 million liquidated in the network in the last 24 hours. Ethereum (ETH) saw $990,000 liquidated on its platform, while Solana (SOL) traders lost around $559,000.
Other blockchain networks also experienced losses. Dogecoin (DOGE) and FTM lost $158,000 and $172,000, respectively, while the remaining networks collectively lost $293,000.
Centralized exchanges (CEXs) were also affected by the liquidations. The largest single liquidation order occurred on OKX, where a trader lost over $4 million in a single order within the last 24 hours. This underscores the risks associated with trading cryptocurrencies, particularly in volatile market conditions.
Upcoming Bitcoin Halving Event
The ongoing liquidation frenzy coincides with the impending Bitcoin halving, scheduled for April 19 or 20, 2024. Currently, only 100 blocks remain before the halving takes place.
Historically, the crypto market has seen significant downturns, with Bitcoin price fluctuations around halving events. In the months to days leading up to the halving, there is often a buildup of anticipation in the market. Investors speculate on the potential impact of the event on the price of Bitcoin.
This speculation can lead to increased volatility and trading activity as traders adjust their positions in anticipation of possible price movements. The current market conditions, characterized by high volatility and significant liquidation, may be partly attributed to the upcoming Bitcoin halving.
Earlier this week, Markus Thielen, the founder of 10x Research, predicted that crypto and stock markets may experience further declines due to the current unexpected and persistent inflationary pressures.
Thielen stated that one of the known indicators of the impending drop is the behavior of the bond market. With the bond market now projecting fewer than three interest rate cuts and 10-year Treasury Yields exceeding 4.50%, Thielen believes that the financial industry may have reached a critical tipping point for risk assets.
These developments suggest a shift in market sentiment towards a more cautious outlook on risk assets. As a result, investors may be re-evaluating their investment strategies in response to the changing market dynamics.
