Cryptocurrency Market Collapse Leads to Swift 140% Rise in Liquidation Events
Cryptocurrency market took a downturn on Friday, with profit-taking intensifying and worries over trade and the Federal Reserve mounting. The plunge saw Bitcoin's price drop to $105,500, slippage from the previous all-time high of $111,900 recorded last week.
Altcoins also suffered losses, with PancakeSwap, Raydium, Etherna, and Arbitrum incurring over 10% decline. The selling pressure resulted in a surge in 24-hour liquidations, with CoinGlass data showing a 125% jump to $709 million, resulting in nearly 224,000 traders being liquidated, the largest loss amounting to almost $13 million.
The market slump can be attributed to Bitcoin's loss of momentum following its robust rally last week that pushed it to its all-time high. After hitting a record level, Bitcoin's price often exhibits a slight pullback.
The downturn in Bitcoin and altcoins can also be linked to the second-worst month for the crypto market- June. Historically, Bitcoin returns an average of -0.35% in June, as many investors take vacation in the summer season's beginning.
Additionally, there remain concerns over trade following a court's ruling that Trump's tariffs were illegal. Another court allowed the tariffs to persist pending the administration's appeal, a process anticipated to reach the Supreme Court.
Moreover, there are indications that the Federal Reserve will keep interest rates steady at 4.50% for some time. Minutes released this week suggest that officials are satisfied with a wait-and-see approach as they assess the impact of tariffs on inflation.
Questions are emerging whether this crypto market slump signals the end of the bull run. However, technical and fundamental analysis suggest that the crypto bull run still has miles to go. As our website reported, the current Bitcoin price action is part of the forming of the handle section of the cup and handle pattern. It is also shaping a bullish flag pattern, which might lead to a strong breakout and a rally in the altcoin market.
Another sign that the bull market isn't over is Bitcoin's supply and demand dynamics. Demand continues to rise, with ETFs bringing in over $45 billion in inflows and more companies adding Bitcoin to their treasuries. The supply on exchanges has dwindled from 3.5 million in 2020 to 1.35 million, indicating that the coin is poised for a rebound.
Meanwhile, the Dow declined amid fresh U.S.-China trade tensions. The correlation between U.S.-China trade tensions and crypto market behavior is apparent, although the market response depends on factors such as the scale of escalation and investor sentiment.
Periods of escalating trade tensions often trigger short-term sell-offs and profit-taking. However, persistent tensions can drive capital into digital assets as safe havens, resulting in price hikes. The overall impact depends on the magnitude of geopolitical risk and investor risk tolerance.
- Despite the downturn on Friday that saw Bitcoin's price drop to $105,500, technical and fundamental analysis suggest that the crypto bull run still has miles to go.
- Altcoins also suffered losses, with PancakeSwap, Raydium, Etherna, and Arbitrum incurring over 10% decline, and the selling pressure resulting in a surge in 24-hour liquidations.
- The slump in Bitcoin and altcoins can be linked to the second-worst month for the crypto market, June, historically known for Bitcoin's average decline of -0.35%.
- The ongoing trade tensions, as evidenced by a court's ruling and the anticipated Supreme Court appeal, are also contributing factors to the crypto market's behavior.
- On the positive side, demand for Bitcoin continues to rise, with ETFs bringing in over $45 billion in inflows and more companies adding Bitcoin to their treasuries, indicating that the coin is poised for a rebound.
