Massive $941M in Cryptocurrency Liquidations as Bitcoin, Ethereum, Dogecoin Retreat from Record Highs
The cryptocurrency market has faced a minor pullback of 1.9%, according to CoinGecko, with major players like Bitcoin, Ethereum, XRP, Solana, Dogecoin, and Cardano all experiencing declines. The U.S. Producer Price Index (PPI) report for July has revealed unexpectedly large inflation data releases, heightening concerns about persistent inflation and delaying potential Federal Reserve interest rate cuts.
This macroeconomic shock has disrupted investor sentiment, sharply increasing volatility, and triggering widespread forced liquidations, particularly of leveraged long positions. Dmitry Lapidus, Head of APAC at CoinFund, attributes these significant liquidations to high leverage in the market, with most perp traders using leverage of up to 100x.
The PPI surge suggests that inflation pressures remain strong in the production pipeline, undermining confidence that the Fed would soon cut interest rates. This bearish sentiment, coupled with the hotter-than-expected inflation data, has led to a cascade of liquidations. In the past 24 hours, $941 million worth of positions have been liquidated across the crypto market, with the majority coming via ETH, BTC, and DOGE.
Ethereum, in particular, has been affected. It broke a psychological barrier of $4,600, a high it last reached in December 2021, and has since dropped by 2.4%. The market dynamics around all-time highs (ATHs) involve stops for shorts and breakout buy-stops clustering just above the ATH, while profit-taking limits cluster right below. This can lead to volatility and sharp fakeouts, making the market increasingly fragile, especially when many traders are heavily positioned in the same direction.
Max Shannon, a senior research associate at Bitwise, suggests that some traders who bought during the 2021 highs may have opted to sell now, just to break even. However, the market remains fragile due to high leverage and heavy positioning in the same direction. Predictors on Myriad Markets initially put the chance of ETH breaking its record price by the end of the year at 94%, but this has since dropped to 89%.
Despite this, only four tokens out of the top 100 cryptocurrencies by market cap have gained more than a percentage in the past 24 hours. The crypto market continues to be a rollercoaster ride for investors, with unexpected events like the July PPI report causing significant market movements.
- Dmitry Lapidus, Head of APAC at CoinFund, has linked the significant liquidations in the crypto market to high leverage in the market, with most perp traders using leverage of up to 100x.
- The cryptocurrency market, according to CoinGecko, has faced a minor pullback of 1.9%, with major players like Bitcoin, Ethereum, XRP, Solana, Dogecoin, and Cardano all experiencing declines.
- In the past 24 hours, $941 million worth of positions have been liquidated across the crypto market, with the majority coming via ETH, BTC, and DOGE.
- Ethereum has been affected significantly; it broke a psychological barrier of $4,600 and has since dropped by 2.4%.
- The market dynamics around all-time highs can lead to volatility and sharp fakeouts, making the market increasingly fragile, especially when many traders are heavily positioned in the same direction.
- Despite this market volatility, only four tokens out of the top 100 cryptocurrencies by market cap have gained more than a percentage in the past 24 hours.
- Max Shannon, a senior research associate at Bitwise, suggests that some traders who bought during the 2021 highs may have opted to sell now, just to break even.
- The U.S. Producer Price Index (PPI) report for July has revealed unexpectedly large inflation data releases, heightening concerns about persistent inflation and delaying potential Federal Reserve interest rate cuts, contributing to the turbulence in the crypto market.
