The Bitcoin (BTC) price experienced a sudden and significant drop, falling over 6% to reach $65,000. This decline resulted in a broader correction of more than 7.8% within the cryptocurrency market as a whole. The impact on altcoins was even greater, with the top ten varieties correcting between 8-15%.
$900 Million Liquidated Amid Bitcoin Price Crash
Based on Coingeasiness information, around $925 million in bullish wagers on cryptocurrencies were terminated in the previous day, which represents the largest single-day decrease in this category over the past month. The economic climate grew tumultuous last Friday as geopolitical strife intensified, causing investors to flock to more stable investments such as bonds and the US dollar for protection.
The correction has affected various asset classes, including the S&P500, gold, and cryptocurrencies. This indicates that investors are taking into account both CPI and inflation concerns, as well as decreasing chances of the Fed reducing interest rates.
Derivative Traders Get Jittery
In the world of options trading, a significant indicator in the Bitcoin market is signaling increasing concern among investors as they prepare for a major update to the Bitcoin software. Historically, such events have been followed by price increases for Bitcoin.
Based on data from Kaiko Research’s latest report, Bitcoin options’ implied volatility increased significantly over the weekend, going against the previous week’s decreasing trend. This surge usually indicates less certainty among traders about the future direction of Bitcoin’s price, as explained by Adam McCarthy, a research analyst at Kaiko. The heightened implied volatility often leads traders to buy more expensive options to protect their current investments or to make bets on possible price fluctuations, whether they anticipate a rise or a fall.
On Fridays, the unpredictability of Bitcoin increased significantly, with price fluctuations surpassing 8%. This instability came as global financial markets were thrown into chaos due to escalating geopolitical tensions.
Kaiko observed a significant jump in implied volatility for forthcoming contracts, rising from 59% to 71% in only two days. This spike suggests increasing expectations among investors for heightened market turbulence in the near future.
McCarthy commented, “In this situation, traders are probably more pessimistic due to their uncertainty. Yet they’re ready to spend more on option contracts to shield themselves from price fluctuations. These traders might be purchasing expensive downside protection.”
Instead of Bitcoin, the drop in value for most altcoins is more pronounced. For instance, Ether, the second-largest cryptocurrency after Bitcoin, saw a steep decrease of nearly 12% at its lowest point, which represents the biggest intraday slide since November 2022. Solana and Dogecoin also suffered significant losses, with declines of approximately 12% and 13%, respectively. Similarly, Cardano and Polkadot both experienced substantial drops, with each coin falling around 15%.
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2024-04-13 07:37