Markets
Cryptocurrency market panic: Bitcoin and Ethereum are collapsing…
4:00 pm ▪ 3 min read ▪ by Luc Jose A.
A shockwave has rocked the cryptocurrency world. In a matter of hours, Bitcoin plunged 8%, Ethereum dropped more than 10%, and millions of dollars in long positions were liquidated. As traders try to understand the reasons behind this sudden drop, concerns are growing about significant fund movements related to Mt. Gox, the now-defunct exchange.
A steep dive for Bitcoin and Ethereum
The cryptocurrency market has been hit by a wave of $580 million in liquidations, a direct consequence of an 8% drop in Bitcoin and similar declines for Ethereum, Solana and Dogecoin. Long trades in BTC and Eth saw losses exceeding $380 million, with the largest single liquidation seen on Binance, where an Ethereum transaction worth $18.4 million was forcibly closed.
These massive liquidations result from highly leveraged positions that traders were unable to hold in the face of sudden price drops. Data from Coinalise shows that this situation has led to one of the largest liquidation waves of the year. Furthermore, open interest, which measures the number of unsettled bets on futures contracts, has fallen by 12%, signaling an outflow of capital from the market. This increased volatility reflects a sense of panic among investors, exacerbated by external factors such as the movement of funds related to Mt. Gox and government decisions influencing the market.
Market dynamics, regulatory developments, and macroeconomic factors all play critical roles in Bitcoin’s price movements. Staying informed and agile is essential for those involved in the market.
Nickolas Hoog, Vice President of Marketing at BitMart
The role of Mt. Gox and other triggering factors
In anticipation of repayments to creditors, Mt. Gox transferred more than $2.7 billion worth of bitcoin to a new address. The move raised fears of increased selling pressure, amplifying price declines.
At the same time, the German government’s decision to liquidate a portion of its bitcoin holdings added a layer of uncertainty to the markets. Traders, already nervous about macroeconomic uncertainty and the upcoming US presidential election, responded by selling their positions massively. This massive liquidation caused significant losses for overleveraged positions, particularly on platforms like Binance, where an Ethereum/USDT trade worth nearly $19 million was liquidated.
This increased volatility and price declines have created a sense of fear among investors, with the fear and greed index falling to alarming levels. The outlook for the market remains uncertain in the short termwith analysts predicting a challenging third quarter marked by increased investor caution and persistent volatility.
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Luc Jose A.
With a degree in Political Science from Toulouse and a blockchain consultant certification from Alyra, I returned to the Cointribune adventure in 2019. Having seen the potential of blockchain to transform several sectors of the economy, I returned to the field to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable each of you to understand blockchain and seize the opportunities it offers. Every day, I make a point of providing an objective analysis of current affairs, deciphering market trends, relaying the latest technological innovations and putting into perspective the economic and social mechanisms of this ongoing revolution.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author and should not be taken as investment advice. Please do your own research before making any investment decisions.