Bitcoin Plunges to $26K as Traders Suffers massive Liquidation
Bitcoin (BTC) traders bore the brunt of the losses, with long liquidations totalling $472 million.
Bitcoin has been on a rollercoaster ride, with the cryptocurrency market experiencing a startling $1 billion in liquidations in the last 24 hours, marking one of the year's most dramatic sell-offs.
The cryptocurrency giant fell 7%, reaching a two-month low of about $26,900, with earlier drops momentarily nearing $25,000, a level not seen since June.
Analyzing the Bitcoin Liquidation Fallout
Following this upheaval, around $821 million in long bets were liquidated, leaving traders who had bet on price rises with losses. Bitcoin traders were the heaviest hit, absorbing $472 million in long liquidations, followed closely by Ether (ETH) at $302 million.
The most recent wave of liquidations set a new record for Bitcoin's single-day liquidation occurrences since June 2022, when Bitcoin's price plummeted to $17,000. The quick liquidation frenzy erupted as cryptocurrency values fell, changing this month's gradual decline into a sharp drop that reflected the broader financial market's uncertainty.
This cryptocurrency market turbulence occurred against the backdrop of global financial uncertainty. Currency depreciation, concerns about the Chinese economy, and rising bond yields all combined to create a hazardous brew.
Leading cryptocurrencies such as Bitcoin and Ether absorbed the brunt of the fall, suffering roughly double-digit losses and falling to their lowest levels since early summer. This combination of circumstances exacerbated the market's downward spiral, generating debate about the endurance of digital assets in times of economic turmoil.
Bitcoin Supply Profit Declines: Glassnode
Glassnode, a prominent on-chain data analytics provider, has offered insights into market sentiment. It highlighted the unique on-chain indicators of euphoria during bullish phases and despondency in bear markets.
Glassnode's data indicated a significant shift in the balance of the Bitcoin market. The percentage of Bitcoin supply in profit has dropped from 71% to 61%. This shift reflects a "top-heavy" market, which has become increasingly price-sensitive.
The insights from The Week On-Chain newsletter, released on Monday, further elaborated on this market shift and its potential implications.
Glassnode's insights revealed that the Bitcoin futures markets witnessed a remarkable flush out of leverage. In just one hour, over 68,000 BTC in contract value were closed. This wave of closures amounted to over $220 million in Bitcoin-long liquidations.
Additionally, the Options Implied Volatility has surged significantly, more than doubling from 24% to over 55%. These sudden shifts highlight the volatility and uncertainty gripping the cryptocurrency market, shaping investor decisions and market sentiment.
Bitcoin Price Analysis
As per CoinStats data, Bitcoin is currently trading at $26,516.1, down -7.53% in the previous 24 hours, with a live market cap of $516B. It has a circulating supply volume of 21,000,000 BTC coins and a maximum supply volume of 21,000,000, with a 24h trading volume of $149B.
Source: CoinStats
The spike in daily trading volume caused by the 7% bearish candle obviously suggests a massive supply flood. As the bearish influence develops, the slide also breaks the 200-day EMA. Bitcoin price is currently trading at $26473, down 0.71% on the day, testing the bullish domination at the 78.60% Fibonacci barrier.
If the downtrend persists or goes sideways, it impacts a down spike in the 50-day EMA, which may lead to a death cross.
Technical indicators such as the MACD and RSI line show a gloomy picture. The bearish crossover, which coincides with an increase in bearish MACD histograms, correlates with the RSI line, which is far into the oversold zone.
Source: TradingView
Conclusion
The recent upheaval in the crypto market underscores the intricate web of interconnected factors – from global economic uncertainties to trading dynamics and sentiment-driven actions. Simultaneous occurrences such as liquidations, market downturns, and on-chain signals underscore the multifaceted nature of the digital asset landscape.
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