The cryptocurrency market has taken a hit this week, with Bitcoin dropping to $65,100, its lowest price in four weeks. This sudden decline saw BTC lose more than 2% in just one hour during the U.S. trading session, down 7.5% over the past seven days.
Not only did Bitcoin suffer, but altcoins also experienced significant losses, with the CoinDesk 20 Index showing a nearly 12% decrease week-over-week. Ether (ETH) fell to $3,400, a drop of over 10% in the same period. Other cryptocurrencies like Solana (SOL), Avalanche (AVAX), Cardano (ADA), and Near (NEAR) saw even larger declines ranging from 15% to 20%, according to CoinGecko data.
The sharp decline in prices led to the liquidation of approximately $180 million in leveraged derivatives trading positions across various crypto assets in the past 24 hours. Long positions, which bet on higher prices, were hit the hardest. Overall, over $870 million in liquidations occurred this week, clearing out excessive leverage from the market.
Many analysts and investors had high hopes for Bitcoin just a few days ago, expecting a breakout to new all-time highs due to lower inflation rates and softer economic data. However, these expectations were quickly dashed as attempted rallies were met with selling pressure, causing BTC to remain stagnant in its sideways trend.
Factors such as the Federal Reserve’s projection of only one rate cut for the year and political uncertainty in Europe, with a snap election called in France, contributed to the market downturn. The strengthening of the U.S. dollar index (DXY) against other major currencies further added pressure on Bitcoin.
Additionally, increased selling from miners and profit-taking from long-term holders around the $70,000 mark weighed on Bitcoin and the broader crypto market, according to 10X Research. These combined factors created a challenging week for cryptocurrency investors.
In conclusion, the recent turmoil in the crypto market serves as a reminder of the volatility and unpredictability of digital assets. Investors should exercise caution and stay informed about market developments to make well-informed decisions in this rapidly changing landscape.