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Bitcoin and Ethereum’s recent declines created a storm in the cryptocurrency world. These drops, resulting in $250 million in liquidations, caused significant losses, especially in long positions. This occurred during a broad decline in the US market, with the Nasdaq Composite falling by 3.65%. Many investors who believed cryptocurrency prices would continue to rise were caught off guard.
$250 Million in Liquidations
In the last 24 hours, $220.7 million worth of long positions were liquidated in the crypto market, while $32 million worth of short positions were closed. Ethereum led the liquidations with $17.5 million, followed by Bitcoin with $14.8 million.
According to CoinGecko data, Ethereum’s price dropped by about 8% to trade around $3,177, while Bitcoin fell by 2.5% to approximately $64,220. This sharp decline occurred during a period when major tech companies also experienced significant losses.
What Did Analysts Say About the Decline?
Analysts note that Bitcoin’s performance is often linked to tech stocks and other market trends. Contributing factors include political developments in Washington D.C. and optimistic expectations regarding spot Ethereum ETFs in the US.
President Joe Biden’s decision to withdraw from the US presidential race created a potential opportunity for Democrats to regain the support of the cryptocurrency community. Experts like Jake Chervinsky and groups like CIFonX suggest that a shift in the party’s stance on crypto and Blockchain policies could capitalize on this moment.
What Are the Long-Term Expectations?
Despite short-term disruptions, some analysts remain optimistic about the long-term prospects of cryptocurrencies. For example, Singapore-based crypto firm QCP Capital maintains a positive outlook for Ethereum.
They cite the launch of the Bitcoin ETF and Bitcoin reaching an all-time high two months later as a positive precedent. The firm believes that institutional interest in Ethereum will continue, potentially driving its price to previous all-time highs.
Broad Sell-Off in the Tech Sector
The broad sell-off in the tech sector was triggered by earnings reports from major companies like Alphabet. These reports revealed higher-than-expected capital expenditures, leading to a drop of over 5% in Alphabet’s shares.
Other tech giants like Tesla and Nvidia also experienced significant declines; Tesla fell by more than 12%, and Nvidia lost 6.8% in value. Nvidia had previously surpassed a market value of $3 trillion due to intense interest in artificial intelligence. However, its value has now dropped to $2.81 trillion amid the market correction.
Overall, the recent downturn in the cryptocurrency market highlights the interconnectedness between cryptocurrencies and broader financial markets. While short-term volatility has affected investors, the long-term outlook remains positive, especially as institutional interest continues to grow.
