Bitcoin and other cryptocurrencies face one of the strongest corrections this year
The relatively neutral week on the cryptocurrency market did not end well for its participants, with the largest coin losing a quarter of its value. Bitcoin has dropped to $47,000, and Ethereum is now trading below $4,000.
Bitcoin is one of the biggest drops in a year
While the largest cryptocurrency on the market has already shown rapid and volatile movements during the year, the most recent drop was the third largest overnight drop in 2021.
Bitcoin has been trading at the local bottom of $42,000 and even going lower on exchanges that have failed to provide enough liquidity for their users. Traders on the cryptocurrency exchange Huobi Global were able to fill orders at approximately $28,000.
The reason for the sharp drop was the widely discussed overheating of the market, which remains heavily leveraged even after the latest 15% correction. Due to a large number of open long and short positions with high leverage, increased volatility swept through most positions in the market within hours.
Ethereum drops below $4,000
With the majority of the market dropping below critical numbers, Ethereum follows the general trend and breaches a strong prior support. It is now trading at approximately $3,900.
The sharp drop in asset values was also caused by high open interest in futures and options, which generally reflect current market volatility. Once the selling pressure hits the scene, a cascade of liquidations causes the price of an asset to drop significantly.
Liquidations reach $1.8 billion
With the majority of leveraged positions on the market closed, the value of liquidated positions almost reaches $2 billion. The value includes liquidation data from various centralized derivatives exchanges and numerous trading pairs.
The providers of the highest liquidation volumes are Binance and OKEx, with $ 706 million and $ 659 million, respectively.
