Originally published on: August 05, 2024
In a sudden and dramatic turn of events, the price of Bitcoin plummeted to as low as $52,500 on August 5, wiping out $600 million in leveraged long positions as the leading cryptocurrency plunged by 10% from $58,350 in less than two hours.
As of the time of publication, Bitcoin has managed to recover some ground and is now trading at $54,384, according to TradingView data. This recent drop marks the first time BTC has traded below $53,000 since February 26, with the price surging following the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States.
Not only did Bitcoin suffer a sharp decline, but the price of Ether also tumbled by 18% from $2,695 to as low as $2,118 within the same timeframe. However, ETH has since bounced back slightly and is currently trading at $2,358, as per TradingView data.
Market analyst Josh Gilbert from eToro noted that crypto often serves as a “leading indicator of sentiment,” indicating that when investors panic or seek to deleverage, crypto assets are usually the first to be affected. Despite the recent sell-off, Gilbert remains optimistic about the future of crypto, especially with the likelihood of Federal Reserve rate cuts, which are expected to benefit crypto assets.
The sharp drop in prices has resulted in over $740 million in leverage positions being wiped out across the crypto market in the past 24 hours, with approximately $644 million in leveraged longs being liquidated, as reported by CoinGlass data. Traders looking to gain leveraged exposure to Ether were hit the hardest, with over $256 million in ETH longs being closed, while $231 million in BTC longs were liquidated.
The recent turmoil in the crypto market coincided with a sharp sell-off in the Japanese stock market, with the Nikkei 225 dropping by 7.1% in early trading hours. This sell-off was exacerbated by weak jobs data in the United States, slowing growth among leading tech companies in the stock market, and concerns about mass selling from crypto trading firm Jump Crypto.
Overall, while the recent crash has caused significant upheaval in the market, many investors see it as an opportunity to enter the market at lower prices. With market sentiments shifting and various factors at play, the future of crypto remains dynamic and full of possibilities.