Over the past 24 hours, $ 1.89 billion has been liquidated from futures positions after Bitcoin (BTC) and Ether (ETH) plunged, with BTC falling below $ 46,000 on Binance.
15-minute BTC / USDT price chart (Binance). Source: TradingView.com
Most of the sales were Bitcoin and Ether, which amounted to $ 555 million and $ 336 million, respectively. But for cryptocurrencies such as XRP, EOS and Litecoin (LTC), there was also significant liquidation as the market fell.
Liquidation on cryptocurrency exchanges. Source: TwitterCryptoRankio
The Lions’ share of the liquidations has taken place at Binance, and at least Bitfinex. This indicates that the former may have the largest percentage of beginners, according to Paolo Arduino, Bitfinex Chief Technology Officer.
“Bitfinex has about 1 billion open contracts, but a very low settlement rate compared to its competitors,” Ardoino explained.
“Finex has traders who use leverage more carefully.”
Short-term price decreases factors
Bitcoin was relatively flexible compared to the rest of the market during the correction. Initially, large cryptocurrencies and decentralized financing tokens suffered the biggest losses, such as Cosmos’ ATOM and SushiSwap’s SUSHI, which are down more than 20% in a single day.
It is possible that the market has corrected due to the long overheating of the alternative digital currency futures market.
The funding rate for many cryptocurrencies on platforms such as Binance Futures has risen to around 0.3% to 0.7% in recent weeks. This is 30 to 70 times higher than the average 0.01%.
This is probably why Bitcoin is relatively small – around 7% compared to 20-30% adjustments in the altcoin market.
But unlike Bitcoin, Ether has shown weakness in the short term, although Bitcoin rose to a full-time high, according to Cointelegraph reports.
As BTC began to decline, Ether lost more than Bitcoin and fell 9% during the same period.
During the month of February, especially when the ETH / BTC pair showed strength, ETH saw a slight decline compared to Bitcoin when it went into pricing. ETH weakness in relation to Bitcoin has had a negative impact on the cryptocurrency market over the past 24 hours.
Why a possible recovery
According to Ki Young Joo, CEO of CryptoQuant, there are enough stable foreign exchange reserves in the cryptocurrency market to give Bitcoin a further step forward.
In the cryptocurrency market, separate capital is often held in stable currencies instead of cash or bank accounts because it is easier and faster to spread them on stock exchanges. Joe said this is the ideal time to buy bitcoin, given the potential for a new rally. he wrote:
“If you are a long-term investor, now is the time to buy $ BTC. I’m not sure how many repairs will be made, but the chain indicator indicates that there are enough stable currencies on the bitcoins exchanges to have another leg up. . ”
Stable currency. Source: CryptoQuant
In addition to the favorable basics, altcoins are rapidly recovering from a correction that looked like a capitulation.
After strong growth in altcoins, both Bitcoin and Ether followed, rising to $ 48,000 and $ 1,800 respectively.
The combination of rapid recovery of major digital currencies and an abundance of stable currencies on stock exchanges increases the likelihood that Bitcoin will continue to rally.