The market capitalization of cryptocurrencies fell by 6%, with more than half a billion cryptocurrency bets liquidated amid simmering geopolitical tensions in the Middle East.
Tensions in the Middle East are shaking the cryptocurrency market
The total cryptocurrency market capitalization fell by 6%, falling to $2.24 trillion at press time, as geopolitical tensions between Iran and Israel escalate. Yesterday, Iran fired ballistic missiles at key Israeli sites, causing the market to remain volatile as Israel vowed to respond in the coming days.
according to Data From CoinGlass, more than $556 million worth of futures contracts were liquidated in the last 24 hours. Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) saw liquidations worth more than $143 million, $119 million, and $20 million, respectively.
Of the $556 million worth of liquidated futures contracts, 86.6% – or $482.2 million – were long positions, while the remaining 13.4% – or $74.6 million – were short positions. In total, 167,802 traders were liquidated in the past 24 hours, with the largest liquidation order on Binance’s BTCUSDT pair worth $12.6 million.
Binance accounted for 49.1% of the total liquidations, with $273.4 million liquidated on the platform. It was followed by OKX, Bybit, and HTX, which saw liquidations totaling $182.6 million, $43.3 million, and $40.2 million, respectively.
For starters, cryptocurrency liquidations occur when a trader’s position is automatically closed by the exchange because he or she does not have enough funds to cover potential losses or margin requirements.
Liquidations typically occur in leveraged trading, where traders borrow money to increase their position size. The stock exchange liquidates its assets if the market moves against it after a certain point to prevent further losses.
Large liquidations – as observed in the last 24 hours – indicate extreme market volatility, which is often caused by sudden price drops or sharp rises. They could indicate that many traders with leveraged positions were caught off guard by these volatile movements, resulting in forced buying or selling. This can increase market instability as liquidations create ripple effects on prices.
It is worth noting that the majority of this liquidation – ranging from 83% to 99% – were long positions, indicating that traders expected asset prices to continue rising until October. Historically, October has been one of the most bullish months for BTC.
The sentiment remains bullish in the market
With the recent decline in digital asset prices, October was not the start for the bulls He hopes to. Since 2013, October has given negative returns for Bitcoin only twice, making it a historically bullish month for the digital asset.
Many cryptocurrency analysts maintain a bullish outlook for October and Q4 2024. For example, a recent report by 10x Research male That there are “exceptionally high” chances that cryptocurrencies will rise before the end of the year.
Likewise, the Bernstein report Poses Republican presidential candidate Donald Trump’s victory in the US presidential election in November could push Bitcoin as high as $90,000 in the fourth quarter of 2024. Bitcoin is trading at $61,448 at press time, down 2.5% in the past 24 hours.
Featured image from Unsplash.com, charts from CoinGlass.com and TradingView.com