Bitcoin saw a significant dip in price last Friday, falling from its previous standing above $70,000 down to roughly $68,450 on crypto trading platform Bitstamp. This marked a $1,700 decrease from its intraday high, signalling a downturn for the cryptocurrency.
The impact of Bitcoin’s drop was felt throughout the entire crypto economy. After Bitcoin fell from its high of $71,949 to $68,450 per unit in just seven hours, it consequently pulled the entire crypto market to a 3.89% decrease. The market suffered as a result, with its valuation dropping to $2.53 trillion. Among notable cryptocurrencies that were affected include XRP, DOGE, SHIB, and LINK.
As the afternoon progressed, around 3:27 p.m. Eastern Time, Bitcoin’s price wavered just below $69,000. This decline saw a significant effect in the cryptocurrency derivatives markets; coinglass.com reported around $454.18 million liquidations within a day. Of this, $405.21 million were long positions, while $86.86 million were specifically Bitcoin long positions. Other cryptocurrencies also took a hit; about $123 million was cut from various other coins and Ethereum (ETH) suffered $67.27 million in losses.
These volatile fluctuations offer a clear testament to the uncertainties present in the cryptocurrency market. With the recent decline in Bitcoin’s value, traders, whether veteran or newbies, are being braced for the potential impacts and unpredictability of the crypto market.
While the liquidations may sting for some, it’s worth noting that large-scale clearing can also be advantageous to the overall market – the reduction of overall leverage can lessen the risk of colossal liquidations, which can lead to severe volatility. This form of ‘cleansing’ can stabilise prices and foster a healthier market environment that promotes sustainable trading practices and entices more traders.