Cryptocurrencies extended declines from Tuesday as Asia futures pointed lower, triggering a wave of liquidations on the Bybit exchange.
The price of bitcoin was last lower by 5.9% at $59,421.95 on Wednesday, according to Coin Metrics. Ether tumbled more than 4.5% to $2,469.50
“Crypto markets moved down sharply, triggering a leverage driven liquidation,” said Steven Lubka, head of private clients and family offices at Swan Bitcoin. “The move appears to have been kicked off by a material drop by Ethereum, which has been struggling all year versus bitcoin.”
Bitcoin falls under $60,000
According to CoinGlass, the futures market has seen $93.52 million in long ether liquidations, which forces traders to sell their assets at market price to settle their debts, across centralized exchanges. Some $85.93 million in bitcoin liquidations have occurred.
“Leverage-driven flushes typically are great buying opportunities,” Lubka added. “And while I expect markets to buy the dip on bitcoin, Ethereum may continue to struggle until investors have a reason to be positive on the asset again.”
For the year, bitcoin is still up 39%. Ether is holding onto a more modest 7% gain.
“This is exactly the type of whipsaw liquidations and price action we see in bull markets,” said Ryan Rasmussen, an analyst at Bitwise Asset Management. “Bulls get over their skis and get wiped out, then it happens to bears, and so on. When you zoom out, a 5% move in the price of bitcoin is a blip on the radar.”
August, a typically quiet month for crypto and risk assets at large, has been particularly volatile this year. However, cryptocurrencies aren’t strangers to big pullbacks in bull markets. Bitcoin is still safely in the range its been sitting in since April – between $55,000 and $70,000.
Some market participants noted that the crypto retracement Tuesday accelerated when news broke that a federal grand jury returned a revised indictment against former President Donald Trump in his criminal election interference case in Washington, D.C.
Trump has positioned himself as the pro-crypto candidate in the upcoming U.S. presidential election. Vice President Kamala Harris, the Democratic candidate, has yet to share a public view on the industry.
“Traders don’t like instability, and often go risk-off to cash in such environments,” said Bartosz Lipiński, CEO at crypto trading platform Cube.Exchange. “That is probably the case for today.”