OVER 79,000 TRADERS GET LIQUIIDATED AS BITCOIN FALLS BELOW $40,000

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Adewale Stock

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Apr 15, 2020
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Bitcoin’s price slid just below $40,000 Monday as several factors — such as rising inflation, geopolitical crises, and change in monetary policy — continue to drive extra short-term volatility in the crypto and stock markets. The crypto market has increasingly tracked the stock market in recent months, which makes it even more intertwined with global economic factors.

Data from Coin Glass reveals that in the last 24 hours, 79,710 traders worth $237.37 million, were liquidated as flagship cryptocurrency asset, Bitcoin fell below $40,000. Since peeking out at $47,313.48 at the start of the second quarter, Bitcoin has been in a downtrend that has seen it lose over $8,000 or 17.63% to currently stand at $38,970.72 as of the time of this writing.

The decline in the market comes despite bullish news from the Terra foundation promising to buy $10 billion worth of Bitcoin to back its programmable stablecoin, UST, which is currently the third most capitalized stablecoin, after flipping BUSD.

The decline in the market is as a result of the strength seen in the dollar index, a measure of the strength of the United States dollar. The dollar index currently trades 100.612 basis points. The last time the dollar traded this high was in 2020, before the COVID-19 crash.

Minutes from the Fed’s March meeting last week showed its plan to shrink its balance sheet by $95 billion each month to combat inflation. The March consumer price index, which measures changes in the cost of food, housing, gasoline, utilities, and other goods, rose by 8.5% from a year ago — the largest inflation surge since 1981. The war in Ukraine also continues to contribute to increased market volatility.

The last time Bitcoin had been stuck below $40,000 was in early March until it jumped in price by 10% to above $42,000 following President Joe Biden’s signing of a sweeping executive order on cryptocurrency. Biden’s executive order called for government agencies to create a plan to regulate cryptocurrency, and to consider a government-issued central bank digital currency. It marked the first concrete steps by the White House to regulate cryptocurrency. By the end of March, Bitcoin was hovering above $45,000 and surpassed the $48,000 mark several times.

“Volatility will most likely return to Bitcoin – and the incumbent financial markets – amid continuing geopolitical risks and growing concerns on the economic outlook,” the trading team for Bitfinex said in a tweet on April 6. Bitfinex is Hong Kong-based cryptocurrency exchange.

Bitcoin’s high point of the year so far remains in the earliest days of January, when it nearly hit $48,000 on Jan. 2. So far, it has stayed above its late January low point below $34,000, which was the lowest it had been in the previous 6 months. Bitcoin has lost 40% of its value since it’s Nov. 10, all-time high above $68,000. While Bitcoin’s price has seen multiple big drops since November, its new highs in 2021 and current price are still an impressive feat considering its humble beginnings and a price below $10,000 as recently as July 2020.

Bitcoin’s price has been between $39,000 and $45,000 so far this week.

Here’s how Bitcoin’s current price compares to its daily high point over the past few months:

TWO WEEKS AGO (APRIL 6): $45,382

ONE MONTH AGO (MARCH 13): $39,163

3 MONTHS AGO (JAN 13): $42,776

Though Bitcoin and Ethereum have both had ups and downs short of their all-time highs since then, many experts still expect Bitcoin’s price to exceed $100,000 at some point.

The volatility highlights a durable truth for Bitcoin; it is still a highly volatile and speculative investment. In fact, the last time the original cryptocurrency set a record high in mid-April, it abruptly lost over half of its value and plunged to around $30,000 by mid-July. Similarly, Bitcoin dropped back below $35,000 this month not long after its most recent November high.


Optics

· The bullish momentum in the dollar index is as a result of more hawkish comments from Federal Reserve officials, who have reinforced expectations for faster U.S. policy tightening.

· New York Fed President, John Williams said that a half-point rate rise next month was “a very reasonable option,” in a further sign that even more cautious policymakers are on board with faster monetary tightening.

· With Bitcoin’s decline below $40,000, so is the same story for the broader cryptocurrency market. The cryptocurrency market capitalization has fallen below $2 trillion again, as it currently stands at $1.81 trillion, down 3.81% in the last 24 hours.

· Ether, the second most capitalized cryptocurrency by market value currently trades below the $3,000 support zone to currently stand at $2,911 as of the time of this writing.

· Of the top 10 cryptocurrencies, majority of them are posting losses of 5% and more in the last seven days with the exception of XRP, which is currently up 3.55% in the last 7 days as positive news from the Ripple case against the SEC has contributed to bullish price action.

· Asides from price, we are also seeing declines in Bitcoin’s network fees. The average transaction fee per Bitcoin (BTC) transaction made a complete 360-degree over nearly two years to settle down at $1.039, a number which was last recorded back in June 2020.

· The average BTC transaction fee saw a steady decline from an all-time high of $62.788 in April 2021 before seeing this U-turn. This represents a 98.35% decline.

· The largest single liquidation order happened on the Okex exchange. The platform recorded a total of $88.13 million worth of liquidation which represents 37.13% of the total liquidations. Longs accounted for $209.66 million or 88.33% of the total liquidations seen in the last 24 hours.