Bears Take Control as Crypto Market Liquidates $580 Million

Major cryptocurrencies have seen significant declines in the last 24 hours, resulting in staggering 580 million dollars in liquidation.

The sharp decline became evident during early asian trading hoursprimarily due to movements from a wallet associated with the defunct Mt. Gox exchange. This movement sparked fears of potential selling pressure among market participants, sending prices down an average of 10%.

Cryptocurrency Market Faces Bearish Pressure

Bitcoin saw a notable 8% decline, briefly falling below the $54,000 mark, effectively erasing all of its gains since February, before recovering slightly.

Likewise, Ether (ETH) has seen an even steeper decline, dropping by more than 10%, while Cardano’s ADA and Solana’s SOL have both fallen by around 8%. Dogecoin (DOGE) has taken the hardest hit, dropping by nearly 18%.

The rapid price decline led to liquidations of long positions (trades that bet on higher prices) of more than $580 million, one of the largest liquidation episodes of 2024.

Bullish bets on Bitcoin and Ether have caused losses of over $380 million. The largest single order liquidation, valued at $18.4 million in ETH, occurred on the Binance exchange.

Meanwhile, open interest, which reflects the total number of active futures contracts, decreased by 12%This observation suggests that a significant amount of capital has exited the market.

In most cases, traders consider liquidations a response to the fear of losing an initial margin. Such events occur when a cryptocurrency exchange forcibly terminates a trader’s leveraged position, considering the the initial margin has been exhausted.

Liquidations also occur when there is little chance that a trader will meet the margin requirements needed to support their leveraged position. In this case, the exchange closes all trades to prevent further losses.

Mt. Gox Movements and Market Fears

Large amounts of Bitcoin have been moved from a crypto wallet linked to Mt. Gox, worsening the market crisis. The activity emerged as the exchange prepared to repay its creditors this month.

Mt. Gox, which collapsed after a major cyber attack in 2014, is expected to begin distributing recovered assets this month after several delays.

Many fear that these refunds, which consist of Bitcoin and Bitcoin Cash, could create selling pressure in the markets. In some ways, they have contributed to the current uncertainty and price volatility.

Meanwhile, trading firm QCP Capital expressed a cautious outlook, predicting a lackluster performance for Bitcoin in the next months.

As reported by Iko Web3, the company said in a Thursday broadcast on Telegram that the third quarter of 2024 could be a period of uncertainty for Bitcoin. He based this prediction on the release of the offering from the defunct Mt. Gox exchange.

This sentiment reflects the broader market’s concern over the potential influx of Mt. Gox-related assets and its impact on prices. Meanwhile, the overall cryptocurrency market holds a market cap of $1.97 trillion, indicating a 7.66% decline over the past 24 hours.

Disclaimer: The views expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile and high-risk asset class.

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