Crypto Market Crash : $1.1 Billion Liquidated In Just One Day

The crypto market, already known for its volatility, has just experienced another major shock. In just 24 hours, over $1.1 billion has been liquidated, revealing the ecosystem’s fragility against increasingly influential macroeconomic forces. The fluctuations of bitcoin and altcoins have not escaped investors’ attention, who saw their positions swept away by this wave of liquidations, increasing the risks associated with this uncertain market.

A Harsh Awakening for Traders

The crypto market crash caught many traders off guard this week, marked by the liquidation of about $1.1 billion in 24 hours. This situation was largely fueled by the brutal correction of the bitcoin price, which saw its value drop below the $107,000 mark.

This drop particularly affected long positions, with $961.92 million liquidated. The market reacted harshly to Jerome Powell’s statement, Chair of the United States Federal Reserve, which cooled expectations for a further interest rate cut.

By emphasizing that a cut in December was not an obvious conclusion, Powell sowed uncertainty, fueling worries about the future of monetary policy and, by extension, speculative assets like cryptos.

Here are the key points explaining this wave of liquidations:

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  $1.1 billion liquidated in 24 hours, with a large part of liquidations coming from long positions on bitcoin.
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  $445.25 million liquidated on bitcoin, a major amount in such a short timeframe.
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  $230.49 million liquidated on Ethereum, following the same trend as bitcoin.
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  The brutal correction was triggered by Jerome Powell’s statements concerning Fed interest rates, highlighting uncertainty ahead for US monetary policy.
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  The crypto market’s fragility was revealed by this series of massive liquidations, especially with immediate impact on major cryptos like bitcoin and Ethereum.

This instability pushed many traders to reconsider their market positions, intensifying the massive sale of bitcoin and other cryptos. Investors’ reaction was swift, as the sudden price drop triggered a violent response, intensified by large-scale liquidations, with $230.49 million liquidated on Ethereum.

This crisis context revealed market vulnerabilities to even slight external disruptions, demonstrating the growing correlation between cryptos and traditional markets.

Towards a More Vulnerable Crypto Market: The Specter of Prolonged Decline

Beyond the immediate aspect of liquidations, another important factor comes into play: the prospects of a prolonged decline in the crypto market. While some analysts still believe in a quick recovery, others speak of a persistent recession in the price of the flagship crypto, potentially down to 30 % below current levels.

This possible correction is all the more significant as macroeconomic uncertainty persists. The stock market has also come under pressure, with losses exacerbating fears related to a possible economic recession. The retreat of equities and weak investor confidence fuel distrust around riskier assets, including cryptos.

It is also possible that the current situation marks the beginning of a phase of increased volatility for the coming months. In response to this dynamic, some investors adjust their strategies, seeking protection against potential new declines. However, the emergence of a large-scale correction does not necessarily mean the end of the bullish cycle for bitcoin and altcoins. The crypto market, though facing immediate instability, could still surprise by its long-term resilience, thanks to continued adoption and major technological developments.

In the short term, the outcome of the crypto market will largely depend on political and economic decisions impacting the global financial climate. The massive liquidations this week highlight a growing market vulnerability, where uncertainty reigns, but also volatility that could still offer opportunities to savvy investors. The current situation requires heightened vigilance, a diversified strategy, and risk anticipation.