Recent stock market volatility has caused a dramatic increase in liquidations in the crypto market. This event comes amid uncertain economic conditions, where investors are reassessing their portfolios in the face of a possible recession.
Massive liquidations in the crypto market
The crypto market has seen a liquidation of over $272 million in the past 24 hours. Bitcoin (BTC) was the crypto asset most affected by these liquidations, with nearly $78 million liquidated, with about $44 million coming from long positions. This increase in cryptocurrency liquidations is linked to the stock market volatility. Indeed, the price of some stocks has recently suffered a notable decline. The S&P 500 experienced its worst session in almost two years.
The Nasdaq Composite Index fell 2.9%, while the Dow Jones lost as much as 989 points. These events prompted investors to reduce their exposure to risky assets, leading to increased selling pressure on cryptocurrencies. The situation was exacerbated by a disappointing US jobs report for July, which raised concerns about an impending recession.
Bitcoin Outlook and Influencing External Factors
BRN analyst Valentin Fournier has suggested that bitcoin could soon retest the $62,500 support level. According to Fournier, the market appears to be in an accumulation phase, with a possible breakout above $70,000 in the medium term, provided liquidity builds up. However, he also highlighted growing uncertainty among investors, partly due to the performance of bitcoin exchange-traded funds (ETFs), which are showing limited positive net flows.
Meanwhile, current political forecasts in the United States indicate that Kamala Harris could surpass Donald Trump in the polls. This anticipation is raising concerns among crypto investors. According to Ruslan Lienkha of YouHodler, Harris’ rise to prominence could lead to stricter regulations on crypto assets, which could hurt bitcoin’s price.
Additionally, bitcoin options show higher implied volatility for puts than calls, suggesting that traders are preparing for a potential decline. Deribit’s weekly report indicates that downside risk is increasingly being anticipated by the market.
In summary, the recent massive liquidations highlight the fragility of the crypto market in the face of economic and political turbulence. As Bitcoin and other cryptocurrencies navigate through uncertainty, investors should be cautious. Changing government policies, particularly in the United States, will play a key role in determining future market trends.
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