Crypto Market Volatility: Unpacking the Triggers Behind 24-Hour Price Turbulence

Crypto Market Volatility: Unpacking the Triggers Behind 24-Hour Price Turbulence

Crypto News – In the span of the last 24 hours, the cryptocurrency market witnessed substantial volatility, marked by sharp price plunges followed by periods of relative stability. According to insights from Lookonchain, an in-depth exploration into the catalysts responsible for this market upheaval is in order.

At precisely 9:30 pm UTC on August 18th, Bitcoin’s valuation plummeted by more than 8% in a mere 10-minute interval, initiating a wave of selling pressure that reverberated throughout the entire cryptocurrency landscape. As the cryptocurrency community grapples with this unforeseen downturn, a myriad of theories has emerged, attempting to account for the abrupt shift: speculations range from Elon Musk’s SpaceX divesting its Bitcoin holdings, the collapse of Evergrande—a prominent Chinese real estate entity—to mounting concerns surrounding the potential escalation of interest rates. However, the exact trigger remains the subject of intense scrutiny and investigation.

It has been suggested that SpaceX, the formidable aerospace technology conglomerate, systematically diminished the recorded value of its Bitcoin assets by an aggregate of $373 million over the course of the past two years.

In a notable article published by The Wall Street Journal, it was illuminated that SpaceX had accounted for Bitcoin assets totaling $373 million in its financial statements for both 2021 and 2022, subsequently purportedly liquidating these digital holdings. The precise extent of this sale remains shrouded in uncertainty, with no definitive confirmation as to whether the entire $373 million worth of Bitcoin was indeed transacted.

In a statement quoted from The Wall Street Journal, “SpaceX progressively recalibrated the valuation of its Bitcoin holdings, amounting to a deduction of $373 million over the span of the past two years, followed by the strategic divestment of its cryptocurrency assets.”

Within a span of less than 12 hours, Bitcoin experienced a sharp decline from $28,000 to $25,000, while Ethereum also retraced from $1,800 to $1,500. In parallel, the market observed the liquidation of over $928 million worth of USDT positions during this same timeframe.

Data procured from the crypto analysis tool, Coinglass, discloses that Bitcoin long positions, collectively valued at over $6.74 million, were liquidated in the four hours leading up to the time of this publication. Over the preceding day, the cumulative liquidation of open long positions held by traders—essentially wagers predicated on the appreciation of cryptocurrency asset prices—surmounted a substantial figure of $836 million.

Nonetheless, a modicum of resurgence was encountered within the market subsequent to reports surfacing that the U.S. Securities and Exchange Commission (SEC) is on the verge of granting approval for exchange-traded funds (ETFs) based on Ether Futures.

Citing undisclosed sources within the context, Bloomberg indicated that the regulatory body appears disinclined to impede proposals from nearly a dozen firms, including ProShares, Volatility Shares, Bitwise, and Roundhill. These entities have recently submitted applications with the intention of introducing ETFs linked to Ether futures.

This announcement functioned as a catalyst, not only arresting the decline of Ethereum but also injecting a measure of stability into the broader crypto market. Investors let out a collective sigh of relief, nurturing hopes that this development might signal the inception of a phase of recuperation.

It’s worth noting that many of the reasons attributed to the market downturn are speculative in nature. Additionally, the timing of the SEC reports, emerging in the wake of the market dip, suggests a potential correlation with the imminent endorsement of Ethereum Futures ETFs. This implies that a substantial fund might have divested its Bitcoin holdings, thereby setting off a ripple effect conducive to increased Ether acquisitions.

Furthermore, Bitcoin underwent its most pronounced surge in implied volatility over the course of a single day for the entirety of the year. Even in light of the recent setback, Bitcoin’s trajectory still boasts a 60% ascent since the commencement of 2023, commencing at an approximate value of $16,550.