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$1.89B liquidated: Why did Bitcoin and ETH price correct sharply overnight?

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In the last 24 hours, $1.89 billion worth of futures positions have been liquidated after Bitcoin (BTC) and Ether (ETH) sharply fell, with BTC reaching below $46,000 on Binance.

BTC/USDT 15-minute price chart (Binance). Source: TradingView.com

Most of the liquidations came from Bitcoin and Ether, which accounted for $555 million and $336 million, respectively. But altcoins like XRP, EOS and Litecoin (LTC) also saw large liquidations as the market plummeted.

Liquidations across crypto exchanges. Source: Twitter @CryptoRank_io

The lion’s share of the liquidations happened on Binance, while Bitfinex saw the least. This suggests that the former may have the biggest share of novice traders, according to Bitfinex chief technology officer Paolo Ardoino.

“Bitfinex has almost 1B in open interest but extremely low liquidation rate compared to competition,” explained Ardoino.

“Finex seems to have traders that use leverage slightly more carefully.”

Factors behind the short-term price drop

Bitcoin was relatively resilient compared with the rest of the market during the correction. Mostly, large-cap altcoins and decentralized finance tokens saw the biggest losses, such as Cosmos’ ATOM and SushiSwap’s SUSHI dropping by over 20% in a single day.

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The market likely corrected as a result of the altcoin futures market being extremely overheated for a prolonged period.

In recent weeks, many altcoins on platforms like Binance Futures saw funding rates spike to around 0.3% to 0.7%. This is 30 to 70 times higher than the average 0.01%.

This is likely the reason behind Bitcoin’s relatively small drop of around 7% compared with the 20% to 30% corrections in the altcoin market.

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But unlike Bitcoin, Ether showed short-term weakness even as Bitcoin was rallying to a new all-time high, as Cointelegraph reported.

Hence, when BTC began to fall, Ether saw a much larger loss compared with Bitcoin, dropping by 9% in the same period.

Throughout February, especially when the ETH/BTC pair was showing strength, ETH saw a smaller pullback compared with Bitcoin as it entered price discovery. The weakness of ETH against Bitcoin has had a negative impact on the altcoin market in the last 24 hours.

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Why a recovery is likely

According to Ki Young Ju, CEO of CryptoQuant, there are enough stablecoin reserves in the cryptocurrency exchange market to trigger another leg up for Bitcoin.

In the crypto market, sidelined capital is often stored in stablecoins rather than cash or in bank accounts because they are much easier and faster to deploy on exchanges. Ju said that it is an ideal time to buy Bitcoin, given that a newfound rally is more likely. He wrote:

“If you’re a long-term investor, now is the time to buy $BTC. Not sure how many corrections would be along the way, but the on-chain indicator says there are enough stablecoins in exchanges compared to Bitcoins to get another leg up.”

Stablecoins ratio. Source: CryptoQuant

In addition to favorable fundamentals, altcoins have begun to recover quickly after a capitulation-like correction.

Following the strong relief rally of altcoins, Bitcoin and Ether followed suit, recovering to $48,000 and $1,800, respectively.

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The combination of the swift recovery of large-cap altcoins and the abundance of stablecoins on exchanges raises the probability of the BTC rally to continue.

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Bitcoin Drops as China Declares Crypto-Businesses Illegal

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  • China declared that cryptocurrency-related businesses are illegal
  • Bitcoin, Ether, and stablecoin Tether do not qualify as legal tender in China
  • BTC drops in price as the announcement went out

Once again, China reiterated its antagonistic stance on Bitcoin and the cryptocurrency industry as a whole.

In an announcement, the People’s Bank of China (PBOC) mentioned that BTC, ETH, and USDT are not legal tenders in China. They added that these cannot be used in the currency market.

Additionally, the central bank deemed all crypto-related businesses as illegal. This includes overseas exchanges serving residents within China and derivative transactions.

Following the news, Bitcoin’s price fell by almost $2,000 as the news circulated. This has been a common pattern whenever China FUD comes out.

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Earlier, China also reiterated its stance on crypto trading and mining while testing the Digital Yuan. According to the PBOC, it will continue releasing regulatory pressure over the crypto trading industry.

Despite the negative news, many analysts remain bullish on Bitcoin and the cryptocurrency industry as a whole. According to analyst Lark Davis, this is not new and will happen again in the future.

In a tweet, Davis mentioned that “The year is 2025, #bitcoin has just corrected from 400k to 250k on China banning BTC fears.”

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Can Bitcoin Surpass $6,000,000? Ethereum and Polkadot Creator Details Possible Future of Crypto

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Early Bitcoin developer and co-founder of Ethereum and Polkadot, Gavin Andresen, is outlining a future where BTC rises to a staggering $6,000,000 per coin.

Gavin Andresen, who took over as Bitcoin’s lead maintainer from founder Satoshi Nakamoto in 2011, just published a new blog post detailing how BTC’s theoretical evolution could look.

Andresen describes a “possible” scenario where Bitcoin hits a price tag of $6,000,000 by 2061, transaction fees 326x higher than they are now, and the blockchain is used chiefly by whales.

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“Imagine: it is the year 2061. The BTC price is six million US dollars – equal to about a million 2021 dollars because of inflation.

Miners are being rewarded 0.006103515625 BTC per block, plus transaction fees of about 5 BTC for 4,000 or so transactions ($7,500 per transaction).

But most BTC transactions don’t happen on the BTC network. Most BTC is locked up in multi-signature outputs secured using multiparty computation and mirrored on another chain as ‘wrapped’ tokens.”

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In his scifi scenario, Andresen says those who do remain on Bitcoin’s network will be incentivized to keep it alive.

“The transactions that do occur on the main BTC network are high-value, mostly between super-whale-size holders…

These whales maintain the BTC network forever. They are the miners and the transaction creators; they don’t care how high transaction fees go, because they receive as many fees as they pay.”

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However, Andresen says that by 2100, even those users would likely leave the blockchain.

“In the year 2100 the whales notice that the mining reward is basically zero… Eventually, there are zero new BTC being produced on the BTC network, and zero BTC circulating on the BTC network. There is nothing left to secure, and the chain stops.”

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

Crypto trader Michaël van de Poppe is looking at what’s ahead for Bitcoin (BTC) and the smart contract platform Cardano (ADA).

The analyst tells his 420,000 Twitter followers that the best entry point for Cardano may be gone after the asset bounced off a key support level at $1.86.

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“If you want to get into Cardano, this was the region where you would want to get into it, and the higher low that might be created.

So based on the daily timeframe, the best entry might be gone, but you’re still getting a better entry than the ones who have been buying around $2.80.”

Van de Poppe is now looking to see if ADA can turn resistance at the $2.37 level into support.

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If the markets correct further, he is keeping an eye on the $2.15 level as a potential buy zone.

“When you’re looking at the four-hour time frame, I think you’re getting the exact same view as what you have right now on Bitcoin and [Ethereum], actually. So you’re going to look for an entry point which is around the fact of $2.15, so anything in this region might be a good entry point if we get a corrective move.”

Looking at the Bitcoin pair, van de Poppe thinks that ADA will most likely consolidate briefly after retesting support at its previous all-time high.

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“We can see that we’ve had a beautiful retest of the previous high here too, and therefore some consolidation is most likely going to take place before we’re going to have new impulse waves.

So both the USDT and BTC pair are looking for continuation, and I think that’s just great, and I think that’s just what we want to see with the markets right now.”

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