Bitcoin (BTC) plummeted to 16% in a day, triggering a wave of liquidations and market turmoil. The sharp decline, which saw BTC drop 30% from its recent peak, resulted in the liquidation of 5,500 BTC long positions worth approximately $303 million over 24 hours, according to data from CryptoQuant on Aug. 5.
The crypto market’s downturn coincided with a broader stumble in global stock markets, highlighting the increasing correlation between digital assets and traditional financial markets. Major exchanges like Binance, Bybit, and OKX saw their open interest nearly halve, significantly reducing leveraged positions.
While Bitcoin’s price found temporary support at the January high of $48,900. Additionally, the February consolidation range of $51,000-$52,000, a breach of these levels could threaten the realized price of long-term holders. This critical threshold represents the average price at which long-term investors acquired their coins.
Two possible scenarios for Bitcoin market movement
CryptoQuant’s analysis indicates the possibility of increased price fluctuations during U.S. trading hours, which could intensify the current market decline. Drawing comparisons to past occurrences, like the “Buddha Beam” incident in May 2021. Where the Coinbase Premium Gap (CPG) revealed a $1,600 price differential.
The current market conditions offer two potential outcomes: either a significant price shift during U.S. trading hours or a quick recovery if key U.S. market participants don’t trigger further selling pressure. The relatively stable nature of the CPG amidst the recent downturn hints that the market correction might not have fully unfolded yet.
Nevertheless, amidst rising concerns about the U.S. economy and broader macroeconomic factors, the recent turbulence in the crypto market has taken center stage. The correlation between digital assets and traditional markets has grown more pronounced. It often reflects the movements of global stock indices through Bitcoin’s price fluctuations.
Related | TRON’s USDT hits record $57.1B in Q2, network usage soars
