Bitcoin price hits a new 2022 low as fear grips the crypto market leading to investors adopting a risk-off stance to crypto and stocks.
The Bitcoin sell-off intensified on May 9, putting traders through another day of agony, and the current price decline pushes Bitcoin to its lowest level since July 2021.
Bitcoin’s price has plunged as low as $29,750 on Bitstamp, according to TradingView, as panicked investors sell their holdings, but it has since recovered a little.
As traders lose their bets on the price of Bitcoin and other cryptocurrencies moving higher in the last 24 hours, the market bloodbath has resulted in a massive amount of liquidations. According to coinglass data, long order liquidations account for 71.93% of total liquidations.
287,445 traders around the cryptosphere liquidated their long orders in just 24 hours, bringing the total amount liquidated to $1.1 billion, possibly the highest figure ever recorded in the market.
What led to the drop?
Fear reigned supreme in the cryptocurrency market as an escalation in the ongoing sell-off deepened, further dampening the bearish sentiment.
Multiple variables are influencing the crypto market price action, including rising interest rates, the Federal Reserve’s end of cheap money policies, falling stock prices, and concerns over the TerraUSD (UST) stablecoin retaining its $1 peg.
Some Whales have started to reallocate their tokens and the largest distributors, or sellers, were individuals in the highest cohort who held at least 10,000 coins. Throughout most of 2022, distribution has outpaced accumulation, according to Glassnode.
For most of 2022, BTC withdrawals from exchanges surpassed inflows, but that trend reversed this week, with inflows exceeding outflows by more than $50 million.
The volume of transactions on the Bitcoin network has also increased in the last week, which blockchain monitoring firm Glassnode attributes to investors de-risking.
Last week, the Bitcoin mempool was flooded with 42,800 transactions. These transactions were most likely urgent due to the obvious hefty fees paid per transaction. According to bitinfocharts, an on-chain data tracker, the average charge jumped to $2.72 last week, approximately 15% higher than the regular average.
Is the market crash over?
There is the chance of even more negative consequences. BTC price is currently down 55% from its all-time high in November, which is considered reasonable when compared to previous Bitcoin bear markets’ ultimate lows.
Last year’s drop peaked at -54.2 percent, while the bear markets of 2015, 2018 and March 2020 capitulated at lows between -77.2 percent and -85.5 percent below the all-time high.
The recent market downturn that has prompted many crypto traders to turn bearish and embrace the potential of a drop to lower levels has piqued investors’ contrarian opinions.
It’s unclear what will happen to Bitcoin next, but it’s best to expect additional volatility as big global events continue to exert pressure on financial markets.