As the market selloff seen throughout the year deepens, over 180,000 traders lost about $520 million as Bitcoin fell below $23,000, a price level not seen since December 2020. Many people have compared the market’s decline to the 2008 market crisis, while others have compared it to the iconic Game of Thrones episode “The Red Wedding.”
Liquidation, margin calls, and fund losses have been the order of the day as Bitcoin has fallen below a major support zone, the $23,000 support zone. The market capitalization of all cryptocurrencies has dropped by almost 8%, and it now stands below $1 trillion as of this writing, suggesting that the market has lost its trillion-dollar status.
As the selloff develops, every other altcoin, like bitcoin, has seen a 20 percent or greater drop in the last seven days. The CEL token, Celsius’s native token, has lost more than 50% of its value in just 24 hours since the platform announced it will stop accepting withdrawals.
When a trader’s leveraged position is forced closed by an exchange due to a partial or total loss of the trader’s initial margin, this is known as liquidation. When a trader is unable to meet the margin requirements for a leveraged position, it is called a margin call (fails to have sufficient funds to keep the trade open). Both margin and futures trading include liquidation.
As of this writing, longs accounted for $351.62 million, or 67.88 percent, of the total liquidations recorded in the market. The rest was made up of shorts.
The year-long bloodbath in the market began in January, when asset whales began selling their holdings in a process known as whale redistribution. Aside from the Russian-Ukraine conflict, the selloffs were exacerbated in May when the US Federal Reserve raised its interest rate to 1%, the highest level since 2000, as part of its policy decision.
We are currently witnessing the consequences of these events and the Federal Reserve’s policy decision. The increase in interest rates by the Federal Reserve in the United States resulted in a strong dollar index (a measure of the strength of the U.S. dollar).
The dollar index is currently trading at a 20-year high, above 104 basis points, as of this writing.
When Bitcoin sneezes, altcoins catch a cold, which is exactly what happened yesterday. The cryptocurrency market has seen a significant sell-off, with many coins losing 20% or more in the last seven days.
The Okex exchange had the greatest liquidations, accounting for $186.74 million, or 36.05 percent of the total. Binance followed in second with $124.90 million, or 24.11 percent of the market.
Bitcoin liquidations were the most common, accounting for $225.72 million of the total liquidations in the last 24 hours, as projected. Second place went to Ether, with $167.26 million, while third place went to SOL, with $13.21 million.
In summary, research suggests that Bitcoin (BTC) fell below $25,000 due to macroeconomic instability and systemic risk within the crypto market. The asset has been decreasing for about a month, falling from nearly $49,000 in March 2022 to under $25,000 today. It appeared to be bottoming out in mid-May, but alarming U.S. inflation statistics reported last week did little to bolster investor confidence.
