The price of Bitcoin (BTC) and Ethereum’s Ether (ETH) plunged by 13% and 21%, respectively, within minutes onAug 2. The relocation liquidated more than $1 billion worth of futures agreements as BTC/USD dropped from around $12,000 to as low as $10,550
BTC/USD 1-hour chart. Source: Tradingview
There seem 2 primary factors behind the abrupt waterfall of liquidations. First, the volume in the cryptocurrency market tends to drop throughout weekends. Second, the marketplace was greatly swayed to longs or purchasers.
Cryptocurrency market photo,Aug 2. Source: Coin360
Surprise weekend relocation strikes the crypto market when again
The cryptocurrency market tends to see big liquidations throughout the weekend. The liquidity typically drops as there are less active traders in the marketplace. Lower volume results in huge price motions, as cryptocurrencies end up being more susceptible.
Mass liquidations end up being most likely throughout the weekend since one big liquidation might activate a waterfall of liquidations. When a long agreement gets liquidated, as an example, it requires the purchaser to market sell, triggering selling pressure.
As numerous countless dollars worth of long agreements started to get liquidated, Bitcoin and Ether dropped quickly. Bitcoin decreased from $12,000 to $10,600 within 15 minutes, while ether decreased from $417 to $300
But mass liquidations occurred numerous times in the previous 5 months. Most significantly, on the so-called “Black Thursday” on March 13, $1 billion worth of liquidations happened. Similarly, right prior to the halving on May 11, the price of Bitcoin dropped to $8,100 resulting in mass liquidations.