Major cryptocurrencies have experienced a significant decline in value, resulting in traders incurring losses of $1 billion in liquidations over the past 24 hours.
The global market capitalization for the cryptocurrency market fell 6.03% over 24 hours to $1.07 trillion.
Bitcoin and other altcoins experienced a considerable decline on Thursday, breaking their stagnancy for the past few weeks. Traders began selling digital assets in anticipation of interest rates remaining elevated for a longer period than initially anticipated.
During the recent market turmoil, CoinGlass data reveals that approximately $823 million worth of long positions were liquidated, causing significant losses for traders who had bet on rising prices. Bitcoin traders were hit the hardest, suffering $488 million in liquidations, followed by ETH with $303 million.
The liquidation events took place as cryptocurrency prices plummeted, transforming this month’s gradual decline into a chaotic situation. This was further exacerbated by concerns over weakening foreign currencies, unease in the Chinese economy, and bond yields soaring to their highest levels in years. As a result, major cryptocurrencies like BTC and ETH experienced substantial double-digit losses, reaching their lowest point since early summer.
China’s real estate giant, Evergrande Group, filed for bankruptcy protection in the United States on Thursday. The company has taken the step of seeking protection under Chapter 15 of the US bankruptcy code. This specific chapter safeguards non-US companies in the midst of restructurings from potential lawsuits by creditors or attempts to control their assets within the United States.
Stocks extended their decline for a third consecutive session on Thursday, as investors carefully analyzed the latest earnings reports and economic data. During the session, the S&P 500 recorded a decrease of 0.77%, while the Nasdaq Composite experienced a decline of 1.17%.
“It looks like some leveraged funds are ramping up bearish bets that Bitcoin will drift lower. The US Commodity and Futures Trading Commission’s (CFTC) report on commitment of traders (COT) showed that as of August 8th, two-thirds are bearish, most likely a result of disappointment with the delays in seeing a Bitcoin US ETF approved,” said OANDA Senior Market Analyst Edward Moya.
He added, “When you throw in what is happening in the bond market, it becomes easy for Bitcoin prices to soften. If risk aversion becomes the dominant theme on Wall Street, Bitcoin’s bearish momentum could target the $27,200 level.”
Crypto analyst Michael Van De Poppe said the recent reset of Open Interest has brought us into uncharted territory – areas where the 4H RSI hasn’t been witnessed since November ’22 and March ’23.
Yup, reset of Open Interest on #Bitcoin and we’re into areas where we’ve not seen the 4H RSI in.
– November ’22.
– March ’23. pic.twitter.com/3wtGH2qIUc
— Michaël van de Poppe (@CryptoMichNL) August 17, 2023
Pseudonymous analyst Bluntz, predicts a potential steep correction in Bitcoin. Drawing parallels to events four years ago, when BTC experienced a massive pullback of over 80% from its 2017 peak.
“The longer we stay down here on BTC without bouncing the more and more I feel like we might be due for a soul-crushing macro pullback similar to 2019. It’s clear momentum is waning here and it’s remaining harder and harder to stay bullish,” Bluntz tweeted.
Produced in association with Benzinga