Blood bath: Over $1 billion was liquidated in the crypto market
After weeks of low volatility, the crypto market experienced a significant drop on August 17, resulting in a loss of over $71.60 billion in total market cap and causing hundreds of thousands of traders to be liquidated from their positions. Among the $1.04 billion liquidated from 177,003 traders, 80% were from long positions. The most affected asset was Bitcoin, with $498.81 million in liquidations, followed by Ethereum with $309.08 million.
What is a liquidation, and why does it happen?
Traders in the derivatives or margin markets open positions on crypto exchanges or specialized platforms by either buying contracts or borrowing money in exchange for collateral deposits. These positions can be forced to close if the traded asset reaches a pre-agreed price, known as the liquidation price. Coinbase has been observed opening short positions against the cryptocurrency market using financial tools like future contracts and borrows.
Bitcoin price analysis
Bitcoin’s price dropped by 7.39% in the last 24 hours, reaching $26,431. This decline was influenced by negative news about China’s Evergrande bankruptcy and Elon Musk’s SpaceX selling all the Bitcoin they held. Expert analysis had previously predicted a dump for Bitcoin on August 7, followed by a potential pump.
Ethereum price analysis
Ethereum also experienced losses, with a 6.14% drop and a current trading price of $1,685. Similar to Bitcoin, expert analysis had anticipated a dump for Ethereum before a possible recovery that could drive its price up. The performance of both Bitcoin and Ethereum will depend on further developments related to the projects and the overall sentiment in the crypto and macroeconomic landscape.
Hot Take
The significant liquidations and price drops in the crypto market highlight the volatility and risks associated with trading cryptocurrencies. Traders should carefully consider their positions and stay informed about market trends and expert analysis to make informed decisions. Investing in cryptocurrencies is speculative, and capital is at risk.
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