Over $1b in Crypto Liquidations as Bitcoin and Ether Lose Support
The cryptocurrency market has seen over $1 billion in liquidations in the past 24 hours, as bitcoin and Ether lose significant support. Bitcoin, the world’s largest cryptocurrency by market capitalization, lost the $25,000 level on Tuesday. Ether, the second-largest cryptocurrency by market cap, briefly slid to nearly $1,200 on Wednesday.
The liquidations come from heavy selling pressure on both bitcoin and Ether. The $1 billion in liquidations represents a significant portion of the cryptocurrency market’s overall capitalization, which is currently around $2 trillion. Bitcoin and Ether have been under considerable selling pressure recently, as investors have taken profits after the massive rally that began in late 2020.
What is the Long-term Outlook for Bitcoin?
The sell-off in cryptocurrencies has caused significant losses for many investors. However, some believe the current pullback is healthy and necessary, as it will allow the market to consolidate before making another run higher. Overall, the long-term outlook for cryptocurrencies remains positive as more institutional investors continue to enter the space.
It is unclear what has caused this sudden sell-off in crypto prices. Some have speculated that it could be due to profit-taking after such a strong run-up in prices recently. Others believe that there could be some underlying technical issues at play. Whatever the case, it is clear that both bitcoin and Ether are facing some headwinds at the moment.
It is called liquidation when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when a trader does not have enough funds to maintain the open trade.
To avoid liquidation, traders must be diligent in monitoring their account balances and ensuring that they have sufficient funds at all times. If a trader is unable to meet the margin requirements for a trade, they may be able to close the position manually before it is automatically closed by the exchange.
If liquidation does occur, the losses can be significant. Therefore, traders must understand the risks involved in trading with leverage and only use it when they are comfortable with the potential for losses.
The drop in value surprised many investors, who had been watching the cryptocurrency climb steadily in recent months. Some analysts remain optimistic about bitcoin’s long-term prospects, arguing that the current dip is simply a correction after such a dramatic run-up in price. Others believe that this could be the beginning of a more prolonged bear market for digital assets.
No matter what the future holds, it’s clear that bitcoin and other cryptocurrencies have become a significant force in financial markets. For better or worse, they are here to stay and will likely continue to see volatility in the months and years ahead.
Bitcoin’s dominance of the cryptocurrency market is often cited as one of the main reasons for its price volatility. When large holders of Bitcoin sell their holdings, it can significantly impact the price.
Another reason for Bitcoin’s volatile price is that it is still a relatively new asset class. As more people become aware of and invest in Bitcoin, its price will stabilize. However, in the meantime, we can expect to see huge swings in its value as investors try and predict which way the market will go next.
Finally, another factor contributing to Bitcoin’s volatility is its lack of regulation. Cryptocurrencies are not subject to government or central bank control, meaning that they are prone to manipulation by large groups of investors. This can lead to sudden drops or spikes in prices, as we have seen in recent years.
Bitcoin investors have been dealt another blow as the value of the cryptocurrency continues to tumble. After peaking at around $69,000 in November, Bitcoin has lost some 66% of its value and is currently trading at just over $22,000.
This 12-week slide is largely due to the U.S. Federal Reserve’s plans to hike interest rates in response to record inflation levels. This move has caused a ripple effect in global markets, with stocks and other risky assets taking a hit as investors seek safer haven investments. For Bitcoin and other cryptocurrencies, this means continued losses as investor confidence remains shaken.
Barry Pene is a stern blockchain research/copywriter. Barry has been trading cryptos since 2017 and has been invested in issues that would put the blockchain industry on the right pedestal. Barry's research expertise cuts across blockchain as a disruptive technology, DeFis, NFTs, Web3, and reduction of energy consumption levels of cryptocurrency mining.
