More than $ 1 billion in crypto positions were liquidated last night, causing the market to collapse. Bitcoin price is currently just over $ 32,000 and is losing nine percent of its value. While the price of Ethereum is currently $ 2. Lose 10 percent of its value overnight.
Twitter user Lex Moskovski tweeted a picture showing the massive liquidations that took place in nine major digital currencies. This shows that approximately $ 1 billion was liquidated in 153,000 accounts within 24 hours. Bitcoin accounted for more than half of the liquidation, with $ 572.94 million being liquidated. This totaled 17,390 bitcoins that were sold and liquidated.
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This has put the market on a downward frenzy as most digital currencies have now fallen. The charts are filled with red numbers as the market reacts to this massive sell-off.
Lex Moskovski is the CEO of Moskovski Capital.
Are we going to the bear market?
With prices falling so sharply and with no signs of an imminent rise, the market could be heading for another bear market. The hash rate has dropped significantly since mining farms closed in China. China has banned cryptocurrencies from its financial institutions. It’s not hard to believe that the market is headed for a bear.
Bitcoin is currently 50 percent below its all-time high. The coin peaked at just over $ 64,000 and is now at $ 32,000.
Massive sell-offs like this one are usually characteristic of an upcoming bear market. After the great crypto boom of 2018, there was a massive sell-off that caused the market to collapse.
Bitcoin price crashed after massive sell-off | Source: BTCUSD on TradingView.com
Sell-offs like this usually cause panic in the market. This is when people get scared and start throwing their coins away. Regardless of whether they make profits or losses. You just don’t want to get caught if the market dumps much further. And so the cycle continues. More people are selling, more people are panicking and they are selling.
At the time of this writing, the charts appear to be recovering. However, this does not necessarily mean that we are heading for a full recovery. From this point on, it’s just a waiting game.
Crypto mining facilities are still trying to set up in other locations. Institutional investors seem to have not yet lost confidence in the market. There are still many institutional investors who are still invested in the market and are not liquidating their coins.
Will there be a recovery in the crypto market?
As always, there is no telling what will happen in the market. At the moment there is a lot of speculation that the liquidations are due to leveraged positions. Many traders are still very optimistic about the market. To believe that this is just the market that is cleaning itself up.
Related reading | Will a big surge in bullish sentiment lead to a Bitcoin rally?
It is not uncommon for markets to dump on the weekend but pick up again during the week. During the weekend, trading levels are usually low as this is when people rest. Not many people are currently monitoring their wealth. This means that trading levels usually drop on weekends.
But then the numbers tend to go up again when people resume during the week. People are back to work checking the markets. The financial markets are reopening and decisions are being made about where to put money.
With MicroStrategy holding $ 500 million that it plans to use to buy Bitcoin, this could be the boost the market needs when the coins are finally bought.
Featured image from India Today, chart from TradingView.com