The digital currency market has seen a major price correction. Over the past 24 hours, major digital assets have seen a decline of up to 7.5%. The price drop follows Bitcoin’s gains over the past week, which led to the liquidation (forced liquidation) of over $150 million in leveraged buyouts over the weekend.
Bitcoin, the leading digital currency, fell 3 percent. Other major cryptocurrencies such as Ethereum (ETH), Cardano (ADA), and Binance Coin (BNB) have also seen similar price declines. Solana (SOL) was trading around $120 on Monday morning, down 7%. Meanwhile, meme-based cryptocurrencies Dogecoin (DOGE) and Shiba Inu (SHIB) also fell by about 5%.
The CoinDesk 20 Index (CD20), which tracks the performance of the top 20 cryptocurrencies excluding stablecoins, fell by just over 4%. This indicator is representative of the overall health of the digital currency market without factoring in stablecoins.
This bearish move left long trades (in anticipation of price increases) exposed to liquidation worth more than $150 million. In contrast, short trades (in anticipation of price declines) suffered a relatively small loss of $9 million. A liquidation occurs when the exchange forcibly closes a trader’s leveraged position due to the trader losing all or part of their initial margin.
Analysts have pointed out that some of the possible reasons for this sudden decline include massive selling by Bitcoin miners and the negative market reaction to the German government’s decision to move a significant amount of Bitcoin to exchanges.
Singapore-based investment firm QCP Capital said in a report:
Due to the post-halving price rally, miners are experiencing additional selling pressure. Bitcoin miners’ reserves have hit a 14-year low, and their total reserves have dropped by 50,000 Bitcoins since the beginning of the year.
The report also added:
The market is also concerned about the emergence of a new major supply chain. The federal government has reportedly sold about 3,000 Bitcoins in recent days, with an additional 47,000 Bitcoins still to be sold.
As previously reported, Bitcoin whales (large-volume holders) sold over $1 billion worth of Bitcoin in the last two weeks of June alone. The Federal Criminal Police Office (BKA), which seized about 50,000 Bitcoins from a hacking site in 2013, began moving tens of millions of dollars worth of Bitcoins to cryptocurrency exchanges such as Coinbase and Kraken last week.
Monday’s price drop marked one of Bitcoin’s worst weeks this year. Bitcoin’s price has struggled in recent weeks due to a combination of factors, including a multi-billion dollar selloff by large holders, a stronger dollar and strong performance by the U.S. tech stock market.
Additionally, U.S.-listed Bitcoin ETFs saw net outflows of more than $1 billion last week, the data showed. The net outflows reflect investors’ desire to exit these funds.
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