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Highlights
- Bitcoin's price fell over 2%, hitting $67,593, leading to a 7.8% downturn in the wider cryptocurrency market.
- Approximately $925 million worth of bullish cryptocurrency bets were liquidated .
- Implied volatility for Bitcoin options surged, indicating reduced confidence among market participants.
The price of Bitcoin (BTC) plummeted by over 2%, reaching $67,593, which contributed to a significant 7.8% downturn in the wider cryptocurrency market. The decline was even more pronounced among altcoins, with the top ten experiencing corrections ranging from 8% to 15%.
$900 Million Liquidated Amid Bitcoin Price Crash
According to Coinglass data, approximately $925 million worth of bullish cryptocurrency bets were liquidated within the last 24 hours, marking the most significant drop of its kind in the past month. The financial landscape experienced turbulence on Friday due to an escalation in geopolitical tensions, prompting investors to seek refuge in traditional safe-haven assets like bonds and the dollar.
However, this correction has been across the asset classes as the S&P500 and even the gold price retrace along with crypto. This suggests that investors are weighing CPI and inflation concerns as well with the chances of the Fed cutting the interest rates going considerably down.
Derivative Traders Get Jittery
A key gauge closely monitored in the options market is starting to indicate growing apprehension among speculators ahead of a significant Bitcoin code adjustment, historically bullish for the cryptocurrency.
According to a report by Kaiko Research, implied volatility for Bitcoin options surged last weekend, reversing the previous week’s downward trend. This uptick typically signals reduced confidence among market participants regarding price direction, explained Adam McCarthy, a research analyst at Kaiko. Rising implied volatility often prompts traders to pay more to hedge existing positions or to speculate on potential price movements, whether upward or downward.
Bitcoin’s volatility intensified on Friday, experiencing swings exceeding 8% amidst turmoil in global financial markets triggered by heightened geopolitical risks.
Kaiko noted a substantial increase in implied volatility for contracts expiring in the next two weeks, soaring from 59% to 71% within just two days. This surge implies a growing anticipation of near-term volatility among investors.
McCarthy added: “In this case it’s likely more bearish as traders are uncertain, but are willing to pay more for options to get protection against price swings. They’re possibly paying high premiums to buy downward protection.”
Apart from Bitcoin, the correction in the altcoin market is even deeper. Ether, the second-largest cryptocurrency following Bitcoin, experienced a significant downturn, plunging by as much as 12% at its lowest point, marking the most substantial intraday decline since November 2022. Solana and Dogecoin followed suit, with declines of approximately 12% and 13%, respectively. Similarly, Cardano and Polkadot witnessed substantial declines, each tumbling around 15%.
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