Cryptocurrency Investors Suffer $900 Million Loss Amid Market Downturn

The digital currency market has experienced a substantial downturn, with the total value plummeting by $900 million within a single day, as reported by Coinglass this Monday.

Out of the total sum liquidated, long trades contributed to $764 million, while short trades amounted to $124 million, the analytics available have illustrated.

These forced sell-offs serve as a stark reminder of the inherent dangers when engaging with unregulated cryptocurrency derivatives platforms that may swiftly liquidate trades if the risk management system sees fit.

The report emphasized that while a handful of liquidations might not noticeably disturb the market, the chain reaction set off by the concurrent liquidation of numerous trades can significantly jolt prices, potentially causing a domino effect that may ensnare further positions in the process.

Elsewhere, Bitcoin’s value succumbed to additional pressures early on Monday, falling to a new low of $53,000 on the exchange Binance, a figure unseen since the earlier parts of the year.

Several contributing factors are behind Bitcoin’s regress, as pointed out by Coinglass, encompassing the climate of unpredictability in the American financial landscape, investors pulling back, and a general spike in market volatility.

Offering his perspective, crypto-market expert Okoro Nnamdi highlighted the expected sell-off in light of Bitcoin’s current technical progression, identifying the “cup and handle” pattern, indicative of an upcoming uptrend once it breaches the resistance level set by the cup’s peak.

“The occurrence of liquidation aligns with expectations given Bitcoin’s ‘cup and handle’ formation, a classic signpost in technical analysis. Presently, it’s on a trajectory to cover the CME gap and is expected to hold steady for a couple of months, indicating the likelihood of a forthcoming bullish movement,” Nnamdi relayed to The PUNCH.

Despite the turmoil, Nnamdi maintains a bullish outlook on Bitcoin for the long haul, projecting a price milestone of $150,000 by 2025.

“In my estimation, Bitcoin’s price goal for 2025 stands at $150,000. This downturn is a window of opportunity for institutional investors to acquire more of it at lower prices,” he appended.

Blockchain specialist and head of SIRFITECH, Adewale Kayode, reported to The PUNCH that the recent market downturn could be traced back to when the Bank of Japan hiked its interest rate from 0% to 0.25%, the first such increase in three decades.

Kayode shed light on the fact that investors worldwide had been leveraging Japan’s zero-interest policy to funnel funds into higher-risk ventures. Yet, with the newly adjusted rates, a wave of trepidation regarding further hikes has prompted these investors to swiftly repay their loans, subsequently triggering a significant withdrawal of capital.