Spectacular drop in Bitcoin to $62,500, 60,000 traders liquidated!

The cryptocurrency market was shaken at the start of the week by a spectacular fall in the price of Bitcoin, which plunged below the $62,500 mark. This dizzying fall led to the liquidation of more than 60,000 traders, causing major disruptions in the crypto ecosystem. Why such a fall?

The sudden fall of Bitcoin

This Monday morning, the crypto market suffered a significant shock when the price of Bitcoin suddenly fell from more than $64,000 to less than $62,500 in a few hours, reaching its lowest level in several weeks. This drop led to the liquidation of more than 60,000 traders, totaling losses amounting to more than $130 million in a single day. Traders were taken by surprise by this rapid descent, exacerbated by a series of automatic liquidations on trading platforms.

This sudden drop comes after an already tumultuous week for Bitcoin. The queen of cryptos had reached a weekly high of $67,000 last Tuesday, but downtrends quickly took over, pushing the price to $63,500 on Friday. The weekend had been relatively calm, with Bitcoin stabilizing around $64,000, before Asian markets opened on Monday morning, causing another significant decline.

Altcoins were also hit hard by this market correction. Cryptos like Ethereum, Binance Coin, and Cardano saw their value drop by around 4%, while memecoins suffered even more severe losses. FLOKI plunged more than 12%, followed closely by WIF, BRETT, PEPE and BONK, all of which saw double-digit declines.

The reasons for the decline

Several factors undoubtedly underlie this brutal fall experienced by bitcoin. We could mention the significant decrease in whale transactions. Over the last two days, these transactions have fallen by 42%, from 17,091 to 9,923. Added to this is a wave of withdrawals. Indeed, some traders on derivatives exchanges have gone into “risk-off” mode, meaning that they have reduced their risk exposure by withdrawing their assets from derivatives platforms. The Interexchange-Flow-Pulse (IFP) indicator that tracks Bitcoin's movements between spot and derivatives exchanges has turned red and signals a decline in market confidence.

At the same time, the market was also impacted by massive outflows from spot ETFs. The previous week had been marked by significant outflows. This exit dynamic obviously contributed to the downward pressure on the price of Bitcoin.

The combination of these factors created a particularly fragile market environment which undoubtedly led individual and institutional investors to liquidate their positions to avoid additional losses, which amplified the fall in the price of Bitcoin.