The Decline in Bitcoin and Altcoins Reminiscent of 2021: Market Could Stabilize - Coin Bulletin

Bitcoin experienced one of the most volatile moments in recent times early this morning. The liquidations in the market brought 2021 to mind.

Bitcoin, after surpassing the $100,000 level, briefly retreated to the $93,000 levels. Then it recovered and is trading above $98,000 as of the morning hours.

In the cryptocurrency market, a total of $1.1 billion in liquidations occurred on centralized exchanges in the last 24 hours. This marks the largest daily liquidation since December 2021. According to Coinglass data, approximately $815 million of this liquidation came from long positions, and $280 million came from short positions.

Bitcoin, with over $560 million in liquidation, was the most affected cryptocurrency during this period.

Why did Bitcoin fall so sharply?

BTC Markets analyst Rachel Lucas said that the price drop was a market movement called "leverage squeeze". Lucas said, "Market makers and big players attracted the attention of retail investors by first raising the price above $100,000. Then they quickly reversed the price and liquidated leveraged positions on both sides (long and short)."

Lucas also noted that retail investors were using excessive leverage during the period when Bitcoin reached its all-time high. 'Many investors succumbed to FOMO (fear of missing out) and opened long positions at high levels. Meanwhile, large investors (whales) strategically liquidated their assets,' he said.

Possibility of market recovery

Lucas, who says that such liquidation events reduce the overheated funding rates and leverage levels of the market, stated that the market could stabilize and have recovery potential after this correction.

"Interestingly, despite the 15% drop in Bitcoin, the relatively strong performance of other cryptocurrencies indicates a broader resilience in the market," he added.