Bitcoin and Altcoins Experience Downturn
Bitcoin faced a slight downturn, dropping to $42,200 from a high of $43,800, marking a nearly 4% decrease. Ether also declined by almost 5% to $2,230, along with other altcoins.
Liquidation of Long Positions
The market downturn led to significant liquidation of long positions on centralized exchanges. Over $94 million in bitcoin positions were liquidated, with the majority being longs. The overall crypto market recorded $320 million in long positions being liquidated, contributing to a total of $360 million in liquidations across various exchanges.
Understanding Liquidations in Derivatives Markets
Liquidations occur in derivatives markets when a trader’s position is forcibly closed due to insufficient funds to cover losses. This happens when market movements go against the trader’s position and deplete their initial margin or collateral.
Surge in DeFi Liquidations
Data provider Parsec’s founder, Will Sheehan, noted a surge in DeFi liquidations of around $2 million. This is the first time in over a year that “retail has been getting leveraged on-chain.”
Reduced Demand for Leveraged Longs
Funding rates for bitcoin, ether, and other cryptocurrencies dropped below +0.01%, indicating reduced demand for leveraged longs. This is a significant decrease from the +0.1% observed in recent weeks.
Positive Outlook for Cryptocurrency
Analysts maintain a positive outlook on cryptocurrency heading towards 2024. Experts at investment management firm VanEck predict that Bitcoin will achieve new all-time highs by the fourth quarter of next year. This optimism is driven by expectations for the upcoming Bitcoin halving event and the potential launch of a spot bitcoin exchange-traded fund.
Hot Take: Cryptocurrency Market Faces Downturn, but Experts Remain Optimistic
The recent downturn in the cryptocurrency market has led to liquidation of long positions and a decrease in funding rates. However, experts are still optimistic about the future of cryptocurrency. They predict that Bitcoin will reach new all-time highs by the end of 2024, driven by upcoming events and potential innovations in the industry.
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