Nearly $430 Million Lost In 24 Hours As Bitcoin Drops Below $66,000
![](https://zemnews.com/wp-content/uploads/2024/04/a_804d88-1024x660.jpg)
Bitcoin (BTC), the flagship cryptocurrency, endured a brutal week, shedding over $4,500 and tumbling below the crucial $67,000 support level. This sudden price reversal triggered a cascade of liquidations across trading platforms, with a staggering $427 million vanishing within a 24-hour period, according to data from CoinGlass.
Analysts are scrambling to pinpoint the exact cause of the downturn, but clues from the options market and activity on retail exchanges offer some insights.
Options Market Foreshadowed Downturn
QCP Capital, a crypto-focused trading firm, believes the options market served as the initial spark for the downward spiral. Their analysis, released earlier this week, revealed a downside skew in risk reversals, a subtle indicator within the options market that often precedes price drops. This suggests that some options traders anticipated a potential decline and positioned themselves accordingly.
Retail Frenzy Fuels Volatility
The dramatic descent was further amplified by substantial liquidations on retail-oriented exchanges like Binance. Perpetual funding rates, which gauge market sentiment on leverage, witnessed a dramatic shift.
Source: Coinglass
Rates plummeted from a lofty 77%, indicating strong bullish sentiment with leveraged positions heavily skewed towards price increases, to flat territory within a short timeframe. This rapid unwinding of leverage positions exacerbated price volatility, creating a self-fulfilling prophecy as falling prices triggered further margin calls and forced selling.
Long Positions Crushed
The brunt of the liquidations fell on long positions, representing bets that the price would rise. A staggering $342 million of the total liquidations came from these bullish positions. Bitcoin itself became the epicenter of the storm, with over $130 million in long positions forcibly liquidated on the flagship cryptocurrency.
BTC market cap currently at $1.3 trillion. Chart: TradingView.com
A Stark Reminder of Crypto’s Risks
This episode serves as a stark reminder of the inherent risks and volatility that plague the cryptocurrency market. When prices plummet unexpectedly, traders employing leverage are forced to offload their holdings at a loss to meet margin requirements. This fire sale mentality can further accelerate price declines, creating a vicious cycle.
Related Reading: Spot ETF Frenzy Cools Down – Are Bitcoin Investors Shifting Focus Now?
The Road Ahead For Bitcoin
While Bitcoin has recovered slightly since the initial plunge, hovering around the $66,500 mark, the recent turmoil has undoubtedly shaken investor confidence.
The coming weeks will be crucial in determining whether this is a temporary setback or the start of a more sustained correction for Bitcoin. Whether bulls can regain control or bears continue to dictate the market remains to be seen.
Featured image from Everypixel, chart from TradingView
nearly-430-million-lost-in-24-hours-as-bitcoin-drops-below-66000