The cryptocurrency market has been rocked by a massive liquidation of leveraged positions totaling $230 million in just 24 hours. This significant market movement was primarily driven by a rapid rise and subsequent fall in Bitcoin’s value. Initially, Bitcoin surged to almost $48,000, only to retreat to around $45,000 shortly after.
Bitcoin’s Wild Price Fluctuations Spark Market Turmoil
The chaos in the market began with a security incident at the US Securities Exchange Commission (SEC). The SEC’s official account on a well-known social media platform was compromised, leading to the posting of a fraudulent message. This message falsely indicated that a spot Bitcoin ETF had been approved. This misinformation briefly sent Bitcoin soaring near the $48,000 mark.
However, the situation quickly unraveled when the SEC declared the information to be false, causing Bitcoin’s price to plummet. This price volatility had a ripple effect across the cryptocurrency market. A staggering amount of over $90 million in leveraged Bitcoin positions were liquidated, making up a significant portion of the total $230 million in liquidations. The majority of these were long positions, amounting to $140 million, with short positions also taking a hit at $91 million.
Bitcoin Faces Potential Price Correction Amid ETF Speculation
Bitcoin’s current trading price stands at $44,622, marking a 2.96% decline from the previous day. This period has been one of the most volatile in recent weeks, with Bitcoin’s annualized volatility rate now at 50.97%.
The market’s anticipation of the potential approval of spot Bitcoin ETFs has significantly influenced investor sentiment. Despite the optimism, a report from CryptoQuant shared with a prominent crypto news outlet, warns of the looming risk of a sudden price correction. The report highlights that high unrealized profit margins, which are prevalent now as Bitcoin prices have risen, have historically led to price corrections. Following the ETF approval, a further increase in prices could heighten the risk of such a correction.
Analysts from QCP Capital have also weighed in on the market’s recent behavior. They observe that the market’s reaction to the false approval news suggests that the possibility of a Bitcoin ETF approval might already be factored into the current prices. They caution that there might not be a significant rally following an actual approval, as the market has possibly already priced in this eventuality.