Cryptocurrencies Plunge as Long Liquidations Trigger Sell-off, Bitcoin Dips Below $60,000
The futures market has experienced significant liquidations, with $93.52 million in long ether liquidations and $85.93 million in bitcoin liquidations on centralized exchanges, as reported by CoinGlass. These liquidations compel traders to sell their assets at market price to settle their debts.
Regarding this market trend, Lubka noted that “leverage-driven flushes typically are great buying opportunities.” He anticipates a market response of buying the dip on bitcoin, while suggesting that Ethereum may face challenges until investors regain positivity towards the asset.
Bitcoin has shown a 39% increase for the year, maintaining a strong performance. In comparison, Ether has achieved a more modest gain of 7%.
Analyst Ryan Rasmussen from Bitwise Asset Management commented on the recent market dynamics, stating, “This is exactly the type of whipsaw liquidations and price action we see in bull markets.” He further explained that market movements in both bullish and bearish directions are common, emphasizing that a 5% price fluctuation in bitcoin is relatively minor when viewed in a broader context.
Despite August typically being a quiet month for cryptocurrencies and risk assets, this year has seen heightened volatility. Notably, cryptocurrencies have historically experienced significant pullbacks during bull markets. Bitcoin has remained within a stable price range since April, fluctuating between $55,000 and $70,000.
Market observers highlighted that the crypto retracement on Tuesday intensified following news of a revised indictment against former President Donald Trump in his criminal election interference case in Washington, D.C. Trump has positioned himself as a pro-crypto candidate in the upcoming U.S. presidential election, contrasting with the yet undisclosed stance of Democratic candidate Vice President Kamala Harris on the industry.
Bartosz Lipiński, CEO of crypto trading platform Cube.Exchange, pointed out that traders tend to adopt a risk-off approach in times of instability, opting to secure cash in such uncertain environments. This cautious sentiment likely influenced market behavior on the given day.
