Bitcoin Price Volatility Triggers $204.3 Million in Crypto Liquidations

Bitcoin Price Dynamics: Fed’s Rate Cut Sparks Major Market Moves

Bitcoin Price – On Thursday morning, Bitcoin (BTC) surged past the $62,000 mark, reaching $62,190, a day after the Federal Reserve announced a decisive rate cut. This significant increase follows a period of volatility triggered by the Fed’s unexpected decision.

Ethereum’s Relative Underperformance

While Bitcoin saw impressive gains, Ethereum (ETH), which is up 5% at $2,435, has underperformed relative to Bitcoin. Over the same two-week period, Ethereum experienced only a 1% increase, reflecting a weaker performance compared to Bitcoin’s rally.

Volatility and Liquidations

Bitcoin’s price saw a dramatic fluctuation, initially spiking to $61,300 before retreating to $59,400. However, bullish momentum soon propelled the price to $62,500 before a slight retrace. This volatility in Bitcoin’s price triggered substantial liquidations in the cryptocurrency derivatives market. According to Coinglass data, $204.3 million worth of contracts were liquidated in the past 24 hours, with $130.5 million coming from short positions and $73.8 million from long positions. The Federal Reserve’s larger-than-expected 50 basis point (bps) rate cut surprised many on Wall Street, as most analysts had anticipated a more modest 25 bps reduction.

Market Reactions to Fed’s Rate Cut

The Federal Reserve’s first rate cut in over four years was perceived as a more assertive strategy to ease monetary policy, aligning with investor hopes for quicker action amidst ongoing economic uncertainty. Alex Kuptsikevich, a senior market analyst at FxPro, noted that the increased risk appetite following the Fed’s decision contributed to cryptocurrencies hitting new highs over the past three weeks.

Challenges and Trends in the Crypto Market

The cryptocurrency market has been moving within a downward corridor since mid-March. According to Kuptsikevich, surpassing the recent peak of $2.25 trillion could alter this trend. He pointed out that the previous peak of around $64,000 for Bitcoin roughly coincides with the 200-day moving average, suggesting that overcoming this resistance level could pave the way for further gains.

Impact of Rate Cuts on Market Dynamics

Chris Aruliah, Head of Institution at Bybit, observed that historically, rate cuts often lead to capital inflows from banks into the stock market, as lower interest rates drive more investment into riskier assets like digital currencies. However, he also cautioned about potential challenges from economic uncertainty and market fluctuations.

Bitcoin’s Price Dynamics and Short-Term Holders

Avinash Shekhar, co-founder and CEO of Pi42, discussed Bitcoin’s price dynamics around the critical $60,000 level. He highlighted that short-term holders, who have been selling since August, signal a potential price bottom, while long-term holders are maintaining support above $60,000. This has created a tug-of-war between bulls and bears. Shekhar suggested that further rate cuts could propel Bitcoin forward, making the $60,000 level a crucial battleground. He added that a high above $62,000 could usher in bullish momentum, while a breakdown below $60,000 could extend selling pressure.

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