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The crypto market goes red with over $500M liquidations in 24 hours

Best Twitter threads of the day - September 2nd
TL;DR Breakdown
  • The crypto market takes a nosedive once more
  • US Federal Reserve officials stand ground to keep raising interest rates until inflation is contained
  • Bitcoin drops to $22,000 crashing investors hopes of recovery
  • Following the crash traders liquidate over $500 million in digital assets

This Friday may be more difficult for the crypto market than in previous weeks. The cryptocurrency market has shown signs of recovery lately, which is encouraging. However, that road to recovery has been stopped in its tracks. On Friday, crypto analytics firm Glassnode released data showing that Bitcoin futures long liquidations had reached a new eight-month high as BTC price crashed below $22,000.

Crypto market bloodbath re-visits investors

On Friday, the digital asset market suffered a substantial drop, resulting in some key support being broken. After a strong upswing throughout the month, the market has tumbled to new monthly lows.

Bitcoin (BTC), which was attempting to break through the $25,000 resistance level last week, fell below $22,000 to establish a new two-week low of $21,747. Ether’s (ETH) price had risen past $2,000 in the weeks leading up to the Merge. However, the price of Ethereum has decreased by 6% in the past 24 hours to establish a new weekly low of $1,726.

In the past 24 hours, 157,098 traders were liquidated after weeks of bullish momentum. This caused total liquidations exceeding $551 million. Coinglass’s data alleges that Bitcoin traders lost approximately $203 million while Ether traders lost around $140 million.

Cryptocurrencies fell sharply as global markets tumbled following remarks from US Federal Reserve officials who said they would continue to raise interest rates until inflation is subdued.

Stocks, gold, and cryptocurrencies are all down in recent days as investors adjust their expectations of when the Federal Reserve will raise interest rates. After the June crypto market crash, Bitcoin investors became more optimistic about improved liquidity, which boosted a more than 40 percent rise in cryptocurrency. 

The crypto market goes red with over $500M liquidations in 24 hours 1

As investors unwind bets that the Fed will raise interest rates less than previously anticipated, digital assets are being punished. Around $220 million worth of cryptocurrency positions were liquidated within an hour on Friday, with Bitcoin accounting for approximately half of that, according to data from Coinglass.

The long liquidations for BTC futures on OKX reached an eight-month high of $84,934,697.05, which breaks the previous high observed on May 5th of $48,630,183.66.

The United States Fed officials weigh in on the September Rate hike

Futures tied to the tech-heavy Nasdaq 100 slipped over 1%, and the dollar index rose to a one-month high of 107.77, indicating risk aversion in traditional markets. Shares of crypto-related stocks such as miners and crypto exchange Coinbase slumped in premarket trading.

The latest turn in sentiment has hit altcoins, which are generally more volatile than Bitcoin and Ether, particularly hard. Solana plummeted 14% on Friday, its biggest drop since June 13th. Cardano also suffered a similar percentage loss.

The economic rebound appears to be floundering as traders have difficulty deciphering the Federal Reserve’s position on interest rates. On Thursday, two Federal Reserve members, James Bullard and Esther George gave opposing views on the size of the next interest rate increase. Both agreed on the necessity to continue increasing borrowing costs.

The sudden fall in the cryptocurrency market is being linked to the anticipated interest rate increase by the United States Federal Reserve in September. August consumer price index statistics came out lower than expected, propelling both the digital asset and foreign exchange markets into a buying frenzy.

Attention now shifts to next week’s Federal Reserve’s annual meeting in Jackson Hole, Wyoming. There’s already talk that Fed Chair Jerome Powell will take a more cautious approach than his predecessor Janet Yellen.

James Bullard, president of the Federal Reserve Bank of St. Louis, said he would support an interest rate increase of 75 basis points next month. This move could precipitate another economic downturn. A similar rate hike by the Fed in June caused crypto markets to crash after an initial price surge.

The market’s sluggishness on Friday follows a strong performance in tech and crypto-related stocks since mid-July. Institutional investment is still pouring into cryptocurrency, suggesting that investors are becoming more confident amid broader market concerns.

Even though the digital market is currently experiencing a macroeconomic downturn, prices for the most popular crypto projects won’t stay low for very long.

In only the last 36 hours, the digital asset markets have experienced severe losses, and it seems this trend will continue through the weekend. In previous months- during what is called the “crypto winter”– weekends were often when digital assets market values tumbled even more. Only time will tell what direction this new financial field takes.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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