BTC suffer a drawdown as NFP triggers liquidation
By Laxmikant Khanvilkar
The virtual digital assets (VDA) space experienced a’flash crash’ in last 24-hours as stronger than expected labour data suggested that the Federal Reserve may take little longer to adjust the interest rates while trying to accommodate macro, which ultimately triggered panic among long position holders in the derivatives markets forcing them to liquidate their positions.
Perpetuals or futures with no expiry saw huge buildup in recent times and hence the bloated position led to higher funding rates, which has actually made the situation uncomfortable for the traders.
Bitcoin (BTC), Ethereum (ETC) and other protocol nosedived due to the massive leverage wipe-out.
BTC plunged to near $40,500 from around $43,800 before retreating to current level at $41,749, down 3.8%.
Ether (ETH), the second largest cryptocurrency, also tumbled over 7% in the same period to below $2,200. It was recently trading at $2,232, a loss 4.2%.
It is worth noting that this week will test traders nerve as the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.
Most of the cryptocurrencies too suffered losses, with Ripple-linked (XRP), dogecoin (DOGE), native tokens of Chainlink (LINK) and Cardano (ADA) nursing 8% to 12% losses during the day.
As a result, the global crypto market cap decreased by 5% to $1.56 trillion in the last 24 hours. On the other hand, the total crypto market volume jumped 120.42% to $97.7 billion. Total volume in DeFi is currently $11.2 billion, and all stablecoins are $89.1 billion, representing 11.5% and 91.2%, respectively, of the total crypto market 24-hour volume. Bitcoin’s dominance is currently 51.88%, down 0.36% over the day.
The IC15 index, the barometer of the top fifteen tokens, slumped 4.9% to 52,752.
Meanwhile, the latest decline wiped out over $520 million in leveraged trading positions on the crypto derivatives market, predominantly longs betting on rising prices, CoinGlass data shows. It was the largest level of daily liquidations in at least three months, according to the firm.
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