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Because of its extreme uncertainty, the cryptocurrency sector has been dubbed volatile. So, when the market saw a decline in price over the last few days, traders were able to blame it on the old headlines of ‘China banning Bitcoin.’ This story, which originally aired in 2017, has made a comeback. This time, China could not be the cause of the recent market decline of digital assets around the price charts.
Market experts had plenty of time to investigate the events leading up to the accident, and the warning signals were there all along. With the increase in trade balances, there was also a large increase in nervousness. According to Ryan Allis, whales began transferring huge amounts of Ethereum and Bitcoin to exchanges for sale on May 20. Allis noted in a recent article that at about 12:40 a.m. UTC, 500,095 ETH [worth $1.65 billion at the time] was transferred. ETH was worth $3.4k at the time, but it plummeted to $3,009 within six hours.
Whales did not stop there, and at 6:30 a.m. UTC, they moved 13,555 Bitcoin [worth $39,000 at the time] into markets to trade. Following that, the BTC price fell to $37,976, causing the ETH demand to fall to $2,651 in five hours.
This was all attributed to the presence of European and US traders, who had awoken to Bitcoin at critical support at $38k, while ETH was clinging to $2.5k. As the assets lost protection at these prices, the price fell precipitously, resulting in major liquidations.
This is among the biggest Bitcoin and Ethereum liquidations ever seen. In reality, this was Ethereum’s worst trading day. The map below shows that the longest hourly candle showed a $2 billion liquidation, which was mostly dominated by ‘sell liquidations.’
On the day of the recent crash, the Bitcoin market saw liquidations worth $3 billion.
If the two big cryptocurrencies were losing ground at high supports, decentralised finance was keeping firm. DeFi tokens such as COMP and AAVE suffered the ripple impact of Bitcoin’s price decline, but they recovered quickly. The entire DeFi market has been able to withstand the high volatility.
What to expect?
If we head further into the bearish zone, it’s important to remember that this is just a passing fad. Many observers assumed that losses like this had happened previously and that the economy had recovered from them.
According to Allis’ review, Bitcoin could reach a new all-time high by July/August, while Ethereum could peak by late June.