The cryptocurrency market recently experienced an unexpected downturn on April 12th, leading to a significant decrease in the prices of Bitcoin and other major altcoins. This sudden decline in prices caused a ripple effect resulting in massive liquidations across the market. While the exact cause of this widespread price dip remains unclear, there are several plausible reasons being speculated. One of the potential factors contributing to this downturn could be a recent correction in the US stock markets.
Data from CoinMarketCap indicates that Bitcoin saw a 4.49% decrease in its price within a day, dropping as low as $66,052. This decline in Bitcoin’s price had a domino effect on the market, with other major altcoins such as Ethereum and Solana also recording significant daily losses. Ethereum experienced an 8.12% decrease, while Solana’s price dropped by 12.16% in the same period.
The price declines seen in Bitcoin and prominent altcoins translated into a substantial number of traders losing their leveraged positions. A total of 277,843 traders were liquidated, leading to a staggering $877.21 million in crypto liquidations within 24 hours, as reported by Coinglass. Long positions accounted for the majority of the losses at $782.98 million, with short traders losing comparatively less at $94.24 million. The swift market reaction resulted in $467 million worth of leveraged positions being closed within an hour, reflecting the volatility of the crypto market.
Interestingly, Bitcoin’s price decline seemed to be correlated with a dip in the US stock market, particularly the S&P 500 index, which declined by 1.6% to trade as low as $5,108. This coincided with recent Consumer Price Index (CPI) data showing a rise in the inflation rate to 3.5% year over year in March. The possibility of the US Federal Reserve (Fed) refraining from implementing rate cuts to control inflation could have negative implications for the crypto market, as investors may shy away from risky assets like Bitcoin.
Despite the recent downturn in prices, there are some positive indicators for Bitcoin in the lead-up to the upcoming Halving event on April 19. Blockchain analytics platform Santiment reported a significant increase in the number of non-empty Bitcoin wallets holding active coins over the past six days. This accumulation trend is seen as a positive sign by analysts, with expectations for it to continue during the Halving event. At the time of writing, Bitcoin was trading at $66,882 with a notable increase in daily trading volume, indicating ongoing market activity.
The recent downturn in the cryptocurrency market has raised concerns among investors and traders alike. The interconnectedness between Bitcoin’s price movements, market liquidations, and external factors such as the US stock market and inflation rates highlights the volatility and complexity of the crypto market. As market participants navigate through these uncertain times, conducting thorough research and staying informed about market trends becomes essential to make informed investment decisions.
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