Points
- The global cryptocurrency market cap dropped to $1.94 trillion, a 13% decline in 24 hours.
- Over 280,000 traders were liquidated, totaling $1.07 billion in liquidations.
- Bitcoin and Ethereum led the liquidations with significant losses.
- Geopolitical tensions and concerns about the global economy contributed to the decline.
- On-chain liquidations reached a new yearly high.
The global cryptocurrency market has experienced a significant downturn as escalating tensions in the Middle East and worries about the global economy’s strength appear to erode investor confidence.
Significant Market Decline
According to Coingecko data, the cryptocurrency market capitalization has plummeted to $1.94 trillion — a drop of over 13% in the last 24 hours. TradingView charts show that today’s decline in the crypto market cap is the largest daily downturn since January 2022.
Widespread Liquidations
In the past 24 hours, a total of 280,093 traders were liquidated — with the total liquidations across centralized exchanges amounting to $1.07 billion — according to data from Coinglass.
Bitcoin and Ethereum Lead Liquidations
Bitcoin led the cryptocurrency market in liquidations, with over $362 million liquidated in the past 24 hours. Of these, approximately $302 million were long positions as BTC dropped nearly 13% to $52,847 at the time of publication, according to The Block’s Bitcoin Price Page. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, increased 18.64% to 95.79 in the same period.
The price decline occurred after the largest digital asset by market cap touched its one-year moving average. According to an X.com post by Trendstorm founder and CEO Philip Swift, “bull runs operate when the price is above the one-year moving average.”
Ethereum also faced significant liquidations, with $346 million liquidated, of which $297 million were long positions, the data showed. The price of ether fell over 20% in the last 24 hours to $2,321, according to The Block’s price page.
On-chain Liquidations Reach New Highs
On-chain liquidations across decentralized finance protocols on Ethereum have reached a new yearly high, with a total of over $350 million in liquidated positions in the past 24 hours, according to data from analytics firm Parsec Finance.
The majority of these liquidations were concentrated in three major assets, affecting lending protocols. Ether collateral faced the brunt of the liquidations, amounting to $216 million over the past day. Wrapped staked ether followed, with liquidations totaling $97 million, and wrapped bitcoin also saw significant liquidations, totaling $35 million.
Negative Futures Funding Rate
Over the past 24 hours, the bitcoin futures funding rate turned negative — suggesting a higher demand for short positions and indicating that traders are betting on the bitcoin price to decline.
Broader Market Context
Cryptocurrency markets started to decline last week, influenced by geopolitical tensions in the Middle East and underwhelming earnings reports from tech companies. These factors dampened investor excitement for artificial intelligence and led to a shift away from risk assets. As an example of how the risk-off sentiment has carried into this week, pre-market trading today shows Apple down 6%, Nvidia down 8%, and both Microsoft and Google down 4.5%.
Monday’s market slump has been intensified by the yen surging to a seven-month high, driven by increasing expectations of further rate hikes by the Bank of Japan. Today, the Tokyo Stock Price Index has recorded its steepest drop since 2011.
Conclusion: Navigating Market Turbulence
The current downturn in the cryptocurrency market highlights the ongoing volatility and the impact of broader economic and geopolitical factors. Investors should remain cautious and consider these factors when making investment decisions, understanding that the market can be influenced by a wide range of external events.
解説
- Market Capitalization: The total value of all cryptocurrencies in circulation, calculated by multiplying the current price by the total supply of coins.
- Liquidations: The forced closure of trading positions due to margin calls or inability to meet margin requirements, resulting in significant financial losses.
- On-chain Liquidations: Liquidations that occur within decentralized finance protocols on a blockchain, typically due to the automatic enforcement of smart contracts.
- Futures Funding Rate: The periodic payment made between traders to maintain the price of perpetual futures contracts close to the spot price. A negative funding rate indicates that short positions are paying long positions, suggesting a bearish market sentiment.
- Risk-off Sentiment: A market condition where investors move away from riskier assets, such as stocks and cryptocurrencies, towards safer investments like bonds and cash.
By staying informed about these key concepts and market trends, investors can better navigate the complexities of the cryptocurrency market and make more informed decisions.