After a sudden jump to $42,000, Bitcoin plunges back to $39,253, liquidations reach $60 million in 1 hour
The price of Bitcoin and other cryptocurrencies plummeted as the market cooled off from yesterday’s peak
When the market faced a sudden jump in capitalization and volume, the crypto community was thrown into short-term euphoria almost immediately, but a cold shower was closer than the market expected as the price of the first cryptocurrency fell to $39,250.
Liquidations are skyrocketing
As most of the market was in strong euphoria, the number of long orders gradually increased, creating the conditions where the slight semblance of selling pressure triggered a liquidation cascade.
Source: Trading Display
According to CoinGlass, the liquidation volume for long orders reached $100 million, and most exchanges reported that about 90% of positions liquidated were Bitcoin long orders. $60 million in orders were liquidated in the past four hours.
Reasons behind drop
A sudden increase in selling pressure was most likely related to the easing of euphoric tendencies following the short-term upturn in the market. The market situation has not changed and the risk avoidance tendencies are still there.
Despite the relief in the financial market, traders still avoid risky assets, such as tech stocks and stocks of companies tied to cryptocurrency mining and trading. But at the same time, Bitcoin is still trading in the rangebound formed in February, showing that there has been no major shift in sentiment towards Bitcoin.
The altcoin market has also experienced a spike in liquidation volume, with currencies like Ethereum and Cardano losing about 5% of their value in the past four hours. A drop in the value of altcoins will most likely follow Bitcoin’s price action.