Major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) fell sharply, with $170 million in long positions liquidated within an hour, according to data from crypto CoinGlass. This dealt a heavy blow to investors who bet that the prices of the two cryptocurrencies would rise further.
Liquidations were primarily carried out by BTC and ETH investors, who liquidated $65 million and $52 million in long positions, respectively. BTC fell below $60,000 late Tuesday, down 6% over the past 24 hours. Meanwhile, ETH fell below the key $2,500 level, down more than 8% over the past 24 hours. Other cryptocurrencies, including Solana (SOL), Dogecoin (DOGE), Cardano (ADA), Toncoin (TON), and Polkadot (DOT) also saw notable declines.
Bitcoin (BTC), Ethereum (ETH) registrations drop sharply
On Friday, Bitcoin (BTC) prices broke above $63,000, boosting other altcoins as reports emerged that Federal Reserve Chairman Jerome Powell was preparing to cut interest rates next month. However, following the liquidations, prices fell sharply, dampening sentiment. Traditional stock markets were largely flat on the day, with analysts not finding any specific trigger for the drop.
Some analysts have pointed out that Bitcoin price action has reached a state of equilibrium recently, which a CoinGlass report suggests could foreshadow a period of heightened volatility. Meanwhile, Fairland Strategies believes that BTC could face a tough time in September, pointing to several factors that suggest possible weakness. “September is a period of seasonal weakness for risk assets in general,” Fairland Strategies noted in its report. “Corrections typically hit the most volatile assets the hardest, albeit temporarily. There are currently signs of slight upside exhaustion, according to the DeMARK indicator, and once the daily stochastic falls below 80%, the risk of a retest of support (around $56,500) increases.”
BTC and ETH lead liquidations
On Tuesday, crypto markets saw over $313 million in liquidations as BTC fell below $60,000. Long traders bore the brunt of the liquidations, accounting for 90% of the total liquidations, worth $282 million. This far outstripped the $31 million in short liquidations. Ethereum (ETH) saw the highest liquidations, over $100 million, of which $93.5 million were long position liquidations. As a result, ETH fell below the critical $2,500 price level, from which it has yet to recover. BTC followed closely behind with over $94 million in liquidations, and its open interest also fell sharply. Open interest refers to the number of unsettled long and short positions in the market, and a drop could indicate increased liquidations or traders taking a cautious approach.
Trends suggest a tough September for BTC
With Bitcoin (BTC) seeing a drop at the end of October, market watchers were hopeful that September would hold better prospects. However, historical data suggests that September has not been kind to the world’s largest cryptocurrency. BTC has ended September in the red eight of the past 11 years, struggling even in bullish years like 2013, 2017, and 2021. However, BTC could break that trend this year, and the U.S. election could be the catalyst.
Many predict that the US election results could have a significant impact on the price of Bitcoin. The Federal Reserve hinted at the possibility of a rate cut in September during the Federal Open Market Committee meeting, which was another catalyst for the rise in Bitcoin prices. Looking ahead, October has always been a strong month for Bitcoin prices, with prices rising in 9 of the past 11 years.
