The Bitcoin and crypto market is now in a real nosedive. Most cryptocurrencies today suffered a double-digit price loss.
Exactly three days ago, the Bitcoin price reached its all-time high at just under $ 42,000. Today, the popular cryptocurrency struggled to keep the $ 30,000 mark.
Many traders and analysts warned of a major correction months ago and now it seems to be the time.
Now Bitcoin is trading for $ 32,600 and Ethereum for under $ 1000. That said, the crypto market has fallen more than 20 percent from recent highs. Here is some key data about this correction and what analysts think will happen next.
How much was liquidated?
Before the correction, the crypto market was extremely overbought. The funding rates of the futures markets were at an extremely high level of 0.1 percent per eight hours for Bitcoin. The Funding Rate is the fee that long positions pay to short positions on a recurring basis.
These high funding rates meant that long positions paid a large amount of short positions to stay long. ByBt has liquidated more than $ 2.8 billion in leveraged crypto positions in the past 24 hours.
Much of that capital was in Bitcoin and Ethereum futures markets. This represents one of the biggest liquidation days in the cryptocurrency market. Despite the correction, funding rates in the crypto futures markets remain high.
Bitcoin’s ongoing correction also appears to be a by-product of macro trends. The US dollar index, which tracks the US dollar against a basket of foreign currencies, has risen 0.6 percent in the past 24 hours. That might not sound like much, but in a market worth trillions of dollars, small shifts have global implications.
Bitcoin Jack analyst, who was one of the most accurate analysts over the past year, says he is derisking his portfolio given the bouncing US dollar along with other macro trends:
Despite this macro backdrop, many say that crypto fundamentals are better than ever.
Bitcoin is fighting for momentum
As mentioned earlier, Bitcoin is currently trading at $ 32,600. This is a remarkable recovery from its morning low of just under $ 30,000.
The rebound from these lows has been encouraging so far, but the bulls need to maintain their upward momentum for this to be a real reversal.
This sell-off seems to have been driven primarily by the spot market, as sell orders were massively stacked on exchanges like Coinbase.
One trader stated that there must be a lot of support somewhere on the buy side – possibly derivatives or TWAP purchases – that countered this and allowed the under $ 30,000 region to act as support.
“There is a bullish argument here because Spot was sold very aggressively, but it did not hit a new low. So something is catching this sale. „