As an analyst with years of experience navigating the turbulent waters of the crypto market, I’ve seen my fair share of ups and downs, geopolitical tensions, and sudden market swings. Today’s 6% drop in the total crypto market cap, triggered by the escalating tension between Iran and Israel, is a stark reminder that this industry never sleeps – or rests easy for long.
The crypto market cap is down by 6%, with more than half a billion crypto bets liquidated amid flaring geopolitical tensions in the Middle East.
Tensions In The Middle East Rattle The Crypto Market
At the moment of reporting, the combined value of all cryptocurrencies has decreased by approximately 6%, now standing at around $2.24 trillion. This downward trend is believed to be linked to escalating geopolitical conflicts between Iran and Israel. Yesterday, Iran launched ballistic missiles towards significant Israeli sites, prompting a volatile market as Israel announced plans for retaliation within the coming days.
Based on CoinGlass’s reports, approximately $556 million in futures contracts were terminated within the last 24 hours. Specifically, Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) had liquidations totaling over $143 million, $119 million, and $20 million individually.
Out of the $556 million in futures contracts that got closed, about 86.6% or $482.2 million were long positions, while the rest, approximately 13.4% or $74.6 million, were short positions. In the last 24 hours, a total of 167,802 traders had their positions liquidated on Binance‘s BTCUSDT pair, with the largest single liquidation order being worth $12.6 million.
Approximately half of all trading platform liquidations (49.1%) occurred on Binance, with a total of $273.4 million being liquidated. OKX, Bybit, and HTX were next in line, with liquidations amounting to about $182.6 million, $43.3 million, and $40.2 million respectively.
To put it simply, for those new to this, “crypto liquidations” happen when a platform automatically closes a trader’s position due to insufficient funds to cover possible losses or meet the required margin.
In the world of leveraged trading, when traders take out loans to amplify their investment, liquidation often occurs. This happens when the market shifts unfavorably for them beyond a specific threshold, and the exchange sells off its assets to halt any additional losses.
A significant number of trades being closed (liquidated) within the last 24 hours signals a highly unstable market, typically caused by rapid price changes. These abrupt shifts often surprise traders with leveraged positions, resulting in them being compelled to sell or buy quickly. This mass selling/buying can intensify market volatility even more since liquidations tend to have a domino effect on prices.
A significant point to note is that a large proportion, ranging between 83% and 99%, of these liquidation events were long positions, suggesting that traders anticipated BTC‘s price would keep rising until October. Traditionally, October has been quite favorable for Bitcoin’s growth.
Bullish Sentiment Remains In The Market
In contrast to what optimistic investors anticipated, the downward trend in digital asset values during October hasn’t been as favorable as past experiences. Interestingly, October has shown positive results for digital assets only twice since 2013, positioning it as a traditionally bullish month for these assets.
Multiple cryptocurrency experts anticipate a positive trend through October 2024 and the fourth quarter, with some predicting an imminent surge in digital currency values by year-end. For example, a recent analysis from 10x Research suggests that there’s a remarkably high likelihood of a significant increase in cryptocurrency prices before 2025.
In a similar vein, a study by Bernstein suggests that if Donald Trump wins the US presidential election in November 2020, Bitcoin could potentially reach an impressive peak of $90,000 by the end of Q4 2024. At the moment, Bitcoin is trading at $61,448, having dropped by 2.5% over the past 24 hours.
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2024-10-03 10:42