The cryptocurrency market posted a major crash on Friday, causing major cryptocurrencies to lose key supports and fall to new monthly lows after a prolonged bull run over the past month.
Bitcoin (BTC), which was looking to break above $25,000 resistance last week, dipped below $22,000 to post a fresh two-week low of $21,747. Ether (ETH), the second largest cryptocurrency, has broken above $2,000 in the run to the meltdown, but plunged 6% in the last 24 hours to post a new weekly low of $1,726.
The flash crash after weeks of bullish momentum also saw 157,098 traders get liquidated in the last 24 hours, resulting in over $551 million being liquidated. Data from Coinglass indicates that Bitcoin traders lost over $203 million in liquidations, followed by Ethereum traders with $140 million.
The chart of liquidations below indicates that the number of long liquidated positions exceeds that of short positions by a significant margin, indicating that the market sentiment was very bullish until the flash crash. The value of liquidated short positions was only $41 million compared to $398 million for long positions.
BTC futures long settlements hit an 8-month high of $84,934,697.05 on OKX (formerly known as Okex), surpassing the previous high of $48,630,183.66 seen on May 5, 2022.
The sudden crash of the cryptocurrency market is attributed to the expected interest rate hike by the Fed in September. The consumer price index (CPI) data for August was lower than expected, causing a bullish surge in the cryptocurrency and coin markets.
Federal Reserve Bank of St. Louis President James Bullard said he would favor a 75 basis point hike. An interest rate hike by the Fed next month could trigger a further drop. A similar interest rate hike of 75 basis points in June caused a turmoil in the cryptocurrency market after an initial rise in prices.
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