Sudden Selloff Strikes The Crypto Market As Bitcoin Reaches Its Lowest Level In Weeks
The price of Bitcoin and many other popular cryptocurrencies suddenly collapsed, sending Bitcoin back below $22,000 early Friday morning. The drop sent the cryptocurrency to its lowest level in more than three weeks. The prices of Ether, Binance Coin, Solana and Cardano also suddenly fell at the same time.
Cryptocurrency market sold off... Suddenly
The reason for the sudden sharp drop is unclear at the time of writing, though it came during a brisk selloff in cryptocurrency trading in Europe. Bitcoin briefly fell from $22,738 to $21,500 at 2:30 a.m., according to data from CoinDesk.
However, it recovered slightly within 10 minutes, falling below $22,000. Hours later, Bitcoin was trading around $21,392. The sudden selloff in cryptocurrency markets came shortly after the largest cryptocurrency by market capitalization rose along with U.S. stocks, surpassing $25,000 for the first time since June.
Ether fell from $1,808 to $1,728, while Bitcoin slipped slightly before recovering. At 3:05 a.m. ET, Ether was trading at $1,733, a price not seen since August 10. A few hours later, the cryptocurrency fell to $1,691.
Is the crypto winter continuing?
In an email this morning, OANDA's Craig Erlam warned that crypto winter may not be over yet.
"Bitcoin took a beating at the end of the week, falling very, very sharply in early European trade," he said. "It has fallen more than 5% in a very short period of time, and while the reason behind this is not clear, the fact that it has barely recovered those losses speaks to the essence of the movement."
He added that a break below the technical support level of $22,500 could be significant, paving the way for another test of the $20,000 support. Since Erlam's email, the price of bitcoin has remained low, paving the way for another test of support levels.
Why unexpected sales?
Simon Peters, crypto market analyst at eToro, told CNBC that a sudden sell-off in the cryptocurrency market could occur as the US stock market falls following the release of the minutes of the Federal Reserve's July meeting. The main takeaway from the minutes is that the Fed will continue to raise interest rates until broad-based inflation stabilizes.
Peters believes the news from the Federal Reserve has finally penetrated the cryptocurrency market and led to a sell-off. He also noted the widespread liquidation of long positions in the bitcoin perpetual futures market. Citing data from Coinglass, Peters said the day saw the largest liquidation of long futures positions since June 18. That was the date Bitcoin hit its lowest price this year at $17,500.
The data shows that over the past 24 hours, 156,155 traders have liquidated more than $537 million from the cryptocurrency market, followed by Bitcoin with more than $200 million, followed by Ether with $130 million. Cipher claims that much of this liquidation came from "failed long positions."
This article originally appeared on ValueWalk
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