TL;DR Breakdown
- Bitcoin price dropped below $34k in the last 24 hours.
- Almost $500 million crypto futures were liquidated.
In the last 24 hours, almost $500 million cryptocurrency futures positions were liquidated when the Bitcoin price dropped below $34k.
As of last night, the leading crypto asset saw its value increase by close to 7 percent. Bitcoin price moved from $35k to $38k; however, during that same period, the futures’ funding rates increased, thereby indicating an over-leveraged market. Major crypto exchanges saw the funding rate rise to as high as 0.07 percent.
Considering the futures market’s typical funding rate is usually around 0.01 percent, its increase plus the rise of Bitcoin price to $38k made the market overcrowded.
Hence, when the asset’s price began to drop due to the several large sell orders that hit the market just above $38,000, the oversaturated futures market played a significant role in the price correction.
Nevertheless, the current $500 million liquidations that hit the futures market is still a long way off the $1 billion liquidations the market saw on its peak days during last week.
It should be noted that despite this level of liquidation, the interest in the futures market is not depreciating. There are still many traders who are still trading on Bitcoin futures in the market. This gives room for a further long squeeze of the market.
Bear market beckons if Bitcoin price drops below $30k
Salsa Tekila, a famous crypto trader, has posited that if Bitcoin price dropped below $30k, it would become a “bear market territory.”
It is essential for the price of the coin to maintain the $30k mark as a significant macro support area. He added that there are “enough underwater bagholders to keep us down for a long while” if the price of the asset ever dips below that price. However, the market could still go on to “reclaim and hold above 40k”.
