Bitcoin Price Drop Below $65,000 Leads to $250 Million in Liquidations

Traders who had placed bets on a rise in cryptocurrency prices found themselves in a rush to close their positions on Wednesday as the leading cryptocurrency in the world experienced a downturn. In the past 24 hours, there has been a significant increase in long liquidations in the crypto market, totaling $220.7 million, predominantly involving positions speculating on price movements. Additionally, approximately $32 million in short positions were also liquidated, as reported by CoinGlass data.

The majority of these liquidations were linked to Ethereum, amounting to $17.5 million, followed closely by Bitcoin at $14.8 million. According to CoinGecko data, Ethereum witnessed an almost 8% decline, currently trading at $3,177, while Bitcoin dropped below $65,000, marking a 2.5% decrease over a 24-hour period and settling around $64,220.

Both cryptocurrencies experienced a sharp decline overnight, coinciding with broader market losses in the U.S., with the Nasdaq 100 index plummeting by 3.65%, the most significant drop since October 2022. Analysts have connected Bitcoin’s performance to that of tech stocks, among other factors such as shifts in the political landscape in Washington, D.C., and optimistic speculation on U.S. spot Ethereum exchange-traded funds.

Despite the unexpected short-term losses catching traders off guard, some analysts remain optimistic about continued upward momentum throughout the year. Singapore-based crypto trading firm QCP Capital expressed a positive outlook on Ethereum in a note, highlighting Bitcoin’s achievement of reaching an all-time high just two months post-ETF launch as a promising precedent.

The tech sell-off was reportedly triggered by the earnings report of major tech companies like Google parent Alphabet Inc., which revealed higher-than-anticipated capital expenses. This led to a more than 5% drop in Alphabet’s stock, its worst performance since January, along with significant declines in Tesla and Nvidia stocks.

Nvidia, whose market cap had surged to over $3 trillion due to interest in artificial intelligence, has since decreased to $2.81 trillion as investor enthusiasm wanes amidst a market correction. Despite the recent market turbulence, analysts foresee a gradual convergence of Ethereum’s price trajectory with its previous all-time high, anticipating sustained institutional interest in the cryptocurrency.