Bitcoin and Ethereum Face Sharp Decline: $320M Liquidated in 24 Hours
In the past 24 hours, major cryptocurrencies, including Bitcoin and Ether, have slumped. While Bitcoin dropped by 7% to $58,034, ETH fell to $2,392, losing 9.4%. The overall markets also withstood part of the $320 million in liquidated positions across the entire network. Most of these liquidations were long orders of about $285.68 million, while short orders saw a liquidation of $34.99 million.
Santiment Insights: Bitcoin Funding Rates and Market Reactions
This retracement develops when there is increased activity in the market, particularly on the exchanges such as dYdX. Data from Santiment has shown that long positions have been slowing down at the fastest pace since Bitcoins peak in March, which reflects a surge in market optimism-or maybe greed-around August 25th.
Nevertheless, this upbeat attitude encountered the tidal wave of liquidations which provoked the steep market correction. Such situations are not rare in the cryptocurrency space, where the extreme funding rates usually cause the abrupt reversals when the market resets.
Santiments data indicate that these instant fluctuations are the result of the imbalance caused by too much leverage. When the funding rates which are the main factor of the cost of keeping a levered position become too uneven, it can be an indication of a future market correction.
This phenomenon is caused by the futures market, where positions can be forcefully ended if they go too far against the holder. Consequently, extreme funding rates that are bullish or bearish mostly come before a reversal, as traders have to unwind their positions, thus a cascading effect is created.
However, market observers should be aware of funding rates in the near term. A shift towards more equal rates, or even a short bias, may point to the market being poised to bounce back. This is in line with the view of some traders who think that the current support levels may hold and, hence, a recovery will be triggered.
One such trader, Nihilus, took to X to express a cautiously optimistic view, suggesting that the market may be nearing a turning point. I believe our time is running out, he tweeted, hinting at a potential recovery in the fourth quarter.
Nihilus opines that the market is presently at a crucial support level and may respond over the coming weekend. He has also warned, though, that if this support is broken, then there could be more downward movement ahead. Such is the nature of crypto world volatility and only time will judicate.
Related Reading | Bitcoins Breakout Spurs Renewed Market Activity Amid Rising Volatility
Read more: https://www.tronweekly.com/bitcoin-and-ethereum-face-sharp-decline/
Text source: TronWeekly
