Cryptocurrency Market Experiences Drop as Traders Face Liquidation
Major cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin, faced a significant drop on Thursday evening as traders betting on long positions experienced substantial liquidation. According to data from Coinglass, over $200 million worth of cryptocurrency long positions were liquidated in the past 24 hours.
Specifically, long positions worth over $65 million for Bitcoin and over $27 million for Ethereum were liquidated. The total number of traders liquidated during this period reached 90,781, with a total liquidation amount of $227.91 million for both long and short positions. Notably, the largest liquidation order occurred on Binance for BTC-USDT, amounting to $7.31 million.
This drop in cryptocurrency prices comes after the introduction of approved spot Bitcoin ETFs on January 11. Since then, the price of Bitcoin has experienced a modest increase followed by a subsequent decrease of approximately 13%. Data updated as of Wednesday reveals that the new spot ETF issuers collectively acquired over 68,000 Bitcoins within their first week of trading. On the other hand, Grayscale’s GBTC has offloaded approximately 40,000 Bitcoins, resulting in a net increment of about 28,000 Bitcoins to the Bitcoin ETFs.
Despite the drop in major cryptocurrencies, some cryptocurrencies experienced gains in the past 24 hours. The top gainer during this period was Flare, with a gain of 5.60%. Other gainers included Conflux (+3.83%) and Astar (+1.93%). However, the overall global cryptocurrency market cap decreased by 0.92% to $1.68 trillion.
On the stock market front, tech companies, led by Apple, drove the market upwards on Thursday. The tech-heavy Nasdaq Composite surged 1.35% to close at 15,055.65, while the S&P 500 advanced 0.88% to end at 4,780.94, nearing its closing record.
The rise in the 10-year Treasury yield to 4.14% was driven by fresh jobs data indicating ongoing tightness in the labor market. Investors are concerned that a thriving labor market and robust consumer spending may lead to fewer rate cuts from the Federal Reserve than initially anticipated.
Cryptocurrency analysts have observed significant market movements and noted a decrease in liquidity. Michael Van de Poppe stated that buying the dip should start below $41,000, while Rekt Capital highlighted the resistance of the Macro Diagonal but expects Bitcoin to break through and reach new all-time highs after the Halving.
Traders maintain long-term optimism regarding the approval of 11 initial Spot Bitcoin ETFs by the SEC on January 10, according to on-chain analytical firm Santiment. However, the FOMO surrounding these approvals may have contributed to the recent drop in Bitcoin’s price.
Overall, the cryptocurrency market experienced a drop as traders faced substantial liquidation, highlighting the volatility and risks associated with investing in cryptocurrencies.
