Bitcoin’s aggressive drawdown in the region of $45,000 provoked panic in the market and the liquidation of cryptocurrency positions worth more than $5.6 billion.
After failing to rebound above $54,000, the price of Bitcoin (BTC) plummeted unexpectedly on Tuesday 23. The downtrend caused panic in the market as BTC extended losses below $47,000 to the region of $44,817 at 11:00 GMT on Bitstamp.
At the time of writing, however, Bitcoin price is stabilizing around $48,439, sagging by 3.67% in the last 24 hours.
It is worth noting that BTC had already given investors cause for concern the day before, having formed a 13% red candlestick on the 4-hour chart.
As a result, February 22 became a record day for the daily Bitcoin trading range. Somewhere along the line, the price deviated from the opening price by $10,877. In contrast, the average range of BTC as of the current year is $3,765.
Wave of liquidations
Just a few hours ago, Bybt‘s data showed mass liquidation of positions on the crypto market amid a sharp drop in all major currencies. According to the data, 645,278 positions worth $5.6 billion were liquidated in the market over the past 24 hours.
Liquidations occur when the leveraged futures position drops to a particular threshold. For instance, a position using 10x leverage would become worthless or liquidated if there is a 5% drop in BTC price.
The lion’s share of these liquidations was predictably in Bitcoin ($2.41 billion). Also, market participants liquidated positions in ETH for $1.35 billion, and for Litecoin (LTC) and Ripple ( XRP ) — almost $200 million for each of the currencies.
The Bloody Monday meat grinder also hit the decentralized finance (DeFi) sector painfully. According to DeBank, the total size of all assets blocked in
The Elon Musk effect
Some members of the crypto community associate the current market dynamics with the “Musk effect”. Recall that recently the head of Tesla has disappointed many participants in the crypto market with his unexpected skeptical statements that the prices of BTC and ETH “do seem high.”
Elon Musk has long been rightfully considered one of the most influential figures in the crypto industry. Recently, his comments caused DogeCoin to rally by 800 +%. He also became one of the drivers behind the last Bitcoin rally to new
Hence, only time will tell if the current situation is a natural correction of an overheated market or a reaction to Musk’s comments.