Crypto Market Hits New Low: Daily Decline Matches January 2022 Record
Crypto Market – In the last 24 hours, the cryptocurrency market cap has faced its largest daily decline since January 2022. The global crypto market has witnessed a significant downturn, driven by escalating tensions in the Middle East and growing concerns about the strength of the global economy, which have contributed to waning investor confidence.
Bitcoin Perpetual Futures Funding Rate Turns Negative
The Bitcoin (BTC) perpetual futures funding rate has turned negative in the past 24 hours, reflecting a shift in market sentiment toward short positions. This negative funding rate indicates that traders are increasingly betting on a decline in Bitcoin’s price. As a result, the global cryptocurrency market capitalization has plummeted to $1.94 trillion, marking a drop of over 13% within the last 24 hours, according to Coingecko data.
Massive Liquidations in the Crypto Market
TradingView charts reveal that today’s decline in the cryptocurrency market cap represents the most significant daily downturn since January 2022. Data from Coinglass shows that a total of 280,093 traders were liquidated, with centralized exchange liquidations amounting to $1.07 billion. Bitcoin has led the market in liquidations, with over $362 million liquidated in the past 24 hours. Of this, approximately $302 million were long positions, as Bitcoin’s price fell nearly 13% to $52,847 at the time of publication, as reported by The Block.
Ethereum and Other Cryptocurrencies Hit Hard
Ethereum (ETH) also faced substantial liquidations, with $346 million liquidated, of which $297 million were long positions. The price of Ether dropped over 20% in the last 24 hours to $2,321, according to The Block’s price page. Liquidations occur when an exchange forcibly closes a trader’s leveraged position due to insufficient funds to meet margin requirements.
On-Chain Liquidations Reach Yearly High
On-chain liquidations across decentralized finance (DeFi) protocols on Ethereum have surged to a new yearly high, totaling over $350 million in liquidated positions in the past 24 hours, according to Parsec Finance. The majority of these liquidations were concentrated in three major assets: Ether collateral ($216 million), Wrapped Staked Ether ($97 million), and Wrapped Bitcoin ($35 million).
Impact of Negative Perpetual Futures Funding Rate
The negative funding rate for Bitcoin futures suggests a higher demand for short positions and a bearish outlook on Bitcoin’s price. Cryptocurrency markets began to decline last week due to geopolitical tensions and disappointing earnings reports from tech companies. This risk-off sentiment is also reflected in pre-market trading today, with Apple down 6%, Nvidia down 8%, and Microsoft and Google both down 4.5%.
Global Market Reactions
The market slump has been exacerbated by the Japanese yen surging to a seven-month high, driven by increasing expectations of further rate hikes by the Bank of Japan. The Tokyo Stock Price Index has recorded its steepest drop since 2011, highlighting the broader economic pressures affecting global markets.
In summary, the cryptocurrency market is experiencing unprecedented volatility and liquidation events, influenced by geopolitical tensions, economic uncertainties, and shifting market sentiments.
FAQ
What caused the recent decline in the cryptocurrency market?
The recent decline in the cryptocurrency market was triggered by several factors, including escalating tensions in the Middle East and concerns about the strength of the global economy. Additionally, a significant downturn in the ISM Manufacturing Index and negative movements in Bitcoin futures funding rates contributed to the market’s drop.
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