During the weekend, the digital asset market encountered increased volatility, leading to a decline in the values of the top ten cryptocurrencies by market capitalization.
Currently, the market is showing signs of recovery, although the total market capitalization has decreased by 0.47% over the past 24 hours, resting at $3.35 trillion.
Bitcoin [BTC] witnessed significant price fluctuations, moving between $95,700 and $98,600 within the last day. Concurrently, Ethereum [ETH], the primary alternative coin, observed a 1.39% decrease, trading at $3,383 at the present moment.
Aside from the surge in volatility commonly observed during weekends due to reduced trading volumes, multiple other elements played a role in the downtrend.
Long Liquidations Totaling $360 Million Contributed to the Downtrend
Data provided by Coinglass indicates that liquidations across the crypto market hit $489 million within a 24-hour timeframe, affecting over 186,000 traders.
Participants with leveraged long positions suffered the most significant losses, with over $360 million wiped out. Notably, Bitcoin experienced $56 million in liquidations, marking the most substantial single-day occurrence in over a week.
Simultaneously, Ethereum and Dogecoin [DOGE] faced substantial liquidations among the alternative coins, with $32 million and $21 million eradicated, respectively.
When long traders undergo liquidation, they are compelled to close their positions by selling, further contributing to the recent downturn.
Profit-Taking Actions
As mentioned earlier, weekends typically witness reduced trading activities. Consequently, even a minor increase in buying or selling behaviors can significantly impact prices.
Data sourced from CryptoQuant reveals that over the past three days, more than 74,000 BTC have been transferred to spot exchanges, indicating some traders’ inclination towards profit-taking post recent gains.
Of this total, roughly 19,238 BTC was moved to exchanges during the weekend. Potential selling following these deposits may have fueled the downtrend in Bitcoin prices and subsequently affected alternative coins.
Market Sentiment Reflects Greed Amidst the Downturn
Despite the recent adjustment, the market sentiment continues to lean towards bullishness. This sentiment is evident in the Fear and Greed Index, standing at 82, denoting “extreme greed.”
While this metric indicates high optimism and confidence among traders, it could also signal an impending correction or change in trend. Traders are advised to monitor signs of substantial profit-taking, as these actions might further fuel declines.