This morning, the cryptocurrency market experienced a significant shock when the price of Bitcoin suddenly plunged after previously holding at $97,748 per coin. In a short time, the price of Bitcoin plunged to $94,249. This price drop not only affected Bitcoin, but also triggered a chain reaction that resulted in many other crypto assets experiencing even more severe declines. For example, XRP fell by more than 11%, SOL fell by 6.5%, BNB fell by 7.48%, and DOGE fell by 8.92%. Some altcoins such as PNUT and DYDX even experienced sharp declines of 22% and 21% respectively.
Despite the dramatic price drop, analysis shows that mainstream coins, such as Bitcoin and Ethereum, only accounted for a small proportion of the liquidations that occurred in the derivatives market. In contrast, altcoins accounted for almost two-thirds of the total liquidations that occurred. This suggests that altcoins were the first to be affected by the liquidations due to this sharp price drop.
This incident highlights the importance of risk management strategies in derivatives trading. In volatile market conditions like this, traders need to have a solid plan to protect their investments. Without a proper strategy, the risk of loss can increase significantly, especially for those investing in altcoins that are more susceptible to price fluctuations.
According to BlockchainCenter’s Altcoin Season Index (ASI), the indicator has fallen below the 75 threshold and is currently at 69. This drop indicates that the altcoin market is going through a less favorable phase, where investors may be more cautious in making investments.
Overall, this morning’s events serve as a reminder to market participants about the importance of a thorough understanding of the dynamics of the cryptocurrency market, as well as the need to implement an effective risk management strategy. With high volatility and the potential for large losses, traders must always be prepared for rapid and unpredictable changes in the market.
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