The worst sell-off of the year occurred on March 10, when the cryptocurrency market unexpectedly went red. The price of Bitcoin fell under $20,000 for the first occasion in three months.
As a direct consequence of this, an overall pessimistic attitude may be observed in the market. As a consequence of the after-effect of the financial crisis, leveraged traders have been left in a state of complete disarray.
Because of this, open trading positions worth millions of dollars were closed out throughout this period.
Massive Losses for Derivative Dealers
Traders in derivatives lost almost $202 million in the previous twenty-four hours, according to data given by a reliable source.
When dealers gamble using liabilities or loans from the exchange, they are participating in leveraged trading or the futures market.
Traders that take part in this type of market have the choice of either “going short” or “going long” with their investments.
When the price reaches a certain level that goes against the trader’s position, it is considered a breaking point. The sale does not go through, which means that the dealer will see a decrease in their overall revenue as a result.
Further analysis of the data provided by the source reveals that Bitcoin has the highest liquidation volumes. It is coming in at over $60 million, with Ethereum coming in at a distant second with $52 million.
This should not come as a surprise given that they’re the two coins that see the greatest volume on the cryptocurrency market.
This is the highest number of reported liquidations that have been seen since the middle of January. Because of the bear market’s downward momentum, about $490 million in assets were sold off on several exchanges in a single day.
Reasons for the Bitcoin Market Fall
Recent events have been a contributing factor in the precipitous price drop that has been hurting the cryptocurrency market.
Silvergate, a cryptocurrency bank, announced its closure on March 9, 2023. Silvergate Capital Company had closed its crypto payment network a week before and was debating whether to continue operating this year.
After Silvergate Capital Corporation shut down its Bitcoin transaction system, this news came. The news that NY AG Letitia James has sued Bitcoin exchange Kucoin fueled these negative opinions.
According to the allegations included in the lawsuit, Kucoin offered, purchased, and sold securities without having properly registered to do so.
Moreover, it asserts that ETH, the native currency of the Ethereum platform, is a guarantee even though it is a cryptocurrency.
According to James, ETH might be considered security since it represents the money being invested in common companies.
When people buy securities, they often get returns that are mostly due to the work of people other than themselves.
The prosecution alleges that Kucoin, one of the oldest exchanges, bargains and presents products to New York accounts via contracts or agreements.
The main reason for these transactions is to reach different goals related to financial investments.
It’s not just cryptocurrencies that have affected the market; factors like the US Federal Reserve’s latest forecasts have as well.
The Federal Reserve chairman, Jerome Powell, told the Senate Banking Committee that the current economic outlook is not what was expected.
The Federal Reserve may raise interest rates more than expected at its March 22 meeting due to inflation predictions.
Coinbase got around $1 billion in Bitcoin from the US government during Silvergate and redistributed it to several wallet addresses.
Cryptocurrency traders worried that the US government would sell some of the Bitcoin it confiscated on the open market.
Even though people said there would be too much supply, the price of Bitcoin has dropped over the past few days.
Expense of Bitcoin
At the time of this writing, the price of Bitcoin has rebounded a little from its drop and is presently trading at $20,126.
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