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At the beginning of the week, the cryptocurrency market was rocked by a spectacular fall in the price of Bitcoin, which fell below the $62,500 mark. This dizzying crash led to the liquidation of over 60,000 traders, causing major disruption to the crypto-ecosystem. Why such a fall?
The Sudden Fall of Bitcoin
This Monday morning, the crypto market suffered a significant shock when the price of Bitcoin suddenly fell from more than $64,000 to just under $62,500 in a matter of hours, hitting its lowest level in several weeks. This drop resulted in the liquidation of over 60,000 traders with total losses of over $130 million in a single day. Traders were caught off guard by this rapid decline, compounded by a series of automatic liquidations on trading platforms.
This sudden drop comes after an already tumultuous week for Bitcoin. The cryptocurrency queen hit a weekly high of $67,000 last Tuesday, but downtrends quickly took over and pushed the price to $63,500 on Friday. It was a relatively quiet weekend, with Bitcoin stabilizing around $64,000 before Asian markets opened on Monday morning, causing another significant drop.
This market correction also hit altcoins hard. Cryptocurrencies such as Ethereum, Binance Coin, and Cardano fell by around 4%, while memecoins suffered even more severe losses. FLOKI fell by more than 12%, closely followed by WIF, BRETT, PEPE and BONK, all of which saw double-digit declines.
Reasons for the decline
Several factors are undoubtedly behind this brutal fall of Bitcoin. We might mention a marked decrease in transactions with whales. Over the past two days, these transactions have fallen by 42%, from 17,091 to 9,923. Added to this was a wave of withdrawals. Some derivatives exchange traders have actually gone into “risk-off” mode, meaning they have reduced their exposure to risk by withdrawing their assets from derivatives platforms. The Interexchange-Flow-Pulse (IFP) indicator, which tracks Bitcoin’s movements between spot and derivatives exchanges, has turned red, signaling a drop in market confidence.
At the same time, the market was also affected by massive outflows of spot ETFs. The previous week was marked by significant outflows. This exit momentum has clearly contributed to the downward pressure on the price of Bitcoin.
The combination of these factors created a particularly fragile market environment that no doubt led individual and institutional investors to liquidate their positions to avoid further losses, exacerbating the decline in the price of Bitcoin.
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A graduate of Sciences Po Toulouse and holder of a blockchain advisor certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I made a commitment to raise awareness and inform the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. Every day I try to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations and put into perspective the economic and social problems of this ongoing revolution.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.