The crypto market saw a sharp correction overnight Thursday/Friday morning, with Bitcoin price crashing within minutes from near $28k to lows of $25,600. Reverberations across the market resulted in over $1 billion in liquidations and the crypto market cap shrunk by nearly 7%.
Traders were left rekt as over $1 billion in liquidations occurred. According to data from Coinglass, the past 24 hours saw 176,700 traders liquidated – total liquidations in the time frame reaching $1.04 billion. Most of the liquidated positions were longs at $832 million, while shorts accounted for about $206 million. Bitcoin saw over $499 million in liquidations – $373 million in longs and $125 million in shorts.
The cause of the sudden Bitcoin price fall is most likely attributed to the broader market’s reaction to Fed minutes released on Wednesday, as well as rumours that Elon Musk’s SpaceX had dumped its BTC holdings. Veteran trader and analyst Gareth Soloway commented on this by saying: “Bitcoin flushed through 28k. With so little volume, stops triggering can cause an outsized move (flash crash). Rumors that SpaceX dumped its holdings (unconfirmed) exacerbated the selling and increased the dump with so few buyers available.”
The recovery towards the critical $28k level is likely to hinge on regulatory news involving the Grayscale ETF application, which is expected today around 11 am ET. Additionally, there’s some optimism related to the approval of several Ether futures ETF applications. These and other market conditions could be key not only to Bitcoin and Ethereum, but the overall crypto market. If Bitcoin falls below $25k, this could bring the $20k support level into view and likely threaten a retest of the 52-week cycle lows. On the other hand, a rebound to $28k on a confluence of upside triggers could inject fresh momentum and strengthen bulls.
