The cryptocurrency market, which has been on a downward trend since the weekend, has taken a major hit in recent hours, losing billions of dollars in value.
According to CoinGlass data, over $1.7 billion worth of leveraged derivatives positions were liquidated in the cryptocurrency over the past 24 hours. The majority of these liquidations were open in bullish expectations. Today’s liquidation is roughly on par with the crash on August 5, and lags behind the volatile move that followed Bitcoin’s sudden drop from $100,000 to $90,000 last Thursday.
There are some signs that momentum is weakening in the crypto market. Analytics firm 10x Research has noted a decline in trading volumes on exchanges and profit-taking by long-term investors.
Markus Thielen described the situation as a "temporary consolidation period before the bull market regains momentum" and advised investors to keep an eye on which positions are holding strong in the market and which are lagging behind.
"To move effectively in the market, one should avoid weak segments and focus on core positions with high confidence," Thielen warned.
In the options market, investors expect prices to remain sideways until the end of the year, preferring to take profits from previous bullish expectations. Digital asset hedge fund QCP said investors are carrying these positions into the new year. “Structurally, we remain optimistic, but spot prices are likely to move within range for the remainder of the holiday season,” the report said.