Bitcoin drops 8% in 10 minutes, diving below the $26,000 mark.
A massive $1 billion in crypto derivatives positions liquidated amid the market upheaval.

Drawing from recent upheavals in the cryptocurrency realm, the sentiment expressed in the tweet by Will Clemente aptly captures the market’s unforeseen shifts, spotlighting key players and influencers, as detailed in a fresh update from Cointelegraph.

Biggest single-day increase in Bitcoin implied volatility of the entire year

Is the volatility drought finally over? pic.twitter.com/tDfU5qMCwY

— Will Clemente (@WClementeIII) August 17, 2023

Bitcoin’s Sudden Tumble

In an unexpected turn of events, Bitcoin’s price witnessed a sharp drop, with its value plummeting around 8% in just 10 minutes. On August 17, Bitcoin was valued at roughly $27,677 at 9:30 pm UTC. However, this quickly changed as it sank to an alarming $25,409, as per data from our Coinmarketcap. Interestingly, the crypto exchange Bitfinex recorded an even steeper drop for Bitcoin, marking its low at $24,715 before it marginally bounced back above $26,000.

Possible Triggers

Multiple factors are being discussed in connection with this sudden descent. Prominent among them is the revelation that SpaceX, under Elon Musk’s leadership, reportedly deducted the value of its Bitcoin holdings by a substantial $373 million and decided to sell off the cryptocurrency. Another potential reason being floated around is the recent news of China’s Evergrande Group opting for Chapter 11 bankruptcy proceedings in New York.

With this dramatic fall, Bitcoin’s market cap was pushed below the $500 billion threshold, a low not seen since June 16. It’s crucial to remember that Bitcoin’s market position was last this low around June 20.

Analyst Insights

Will Clemente, a renowned cryptocurrency analyst, took to Twitter to highlight that Bitcoin registered its highest single-day surge in implied volatility for the entire year. While the volatility may concern some, it’s worth noting that Bitcoin has managed to achieve a growth of 60% since the beginning of 2023, having started the year at approximately $16,550.

Broader Market Impact

While Bitcoin’s slip under the $26K mark was transient, the broader cryptocurrency market too felt the tremors. The overall crypto landscape saw an 8% decline against the U.S. dollar, dangerously nearing the $1 trillion mark. The aftermath of this downturn was a staggering $1 billion liquidation of derivatives positions in the crypto domain.

Stablecoins and Major Cryptos

Trading volume over the day was a hefty $69.60 billion, of which $37.62 billion was dominated by stablecoin trading. This suggests a significant fraction of traders possibly transitioning to stablecoin pairs or favoring the dollar-tied token ecosystem. Alongside Bitcoin, Ethereum (ETH) suffered a 9.3% dip against the dollar on that day, with XRP experiencing a sharper 14.7% decline.

Crypto Liquidations

On scrutinizing the day’s trade details, Bitcoin transactions accounted for $23.22 billion. Furthermore, in a span of 24 hours, crypto enthusiasts had to grapple with over $1 billion in liquidations. This encompassed Bitcoin derivatives traders incurring a loss of $477 million and ETH traders seeing $307 million vanish. Breaking this down further, of the $1.03 billion liquidated, shorts were $189.67 million, while a whopping $826.60 million were long positions. The SHIB token, on the other hand, registered a 13.8% dip due to issues related to the Shibarium launch.

 

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Filed under: Bitcoin - @ August 19, 2023 6:44 am