Leveraged longs are having a rough day as they lose over $630 million in liquidation as Bitcoin falls after yesterday’s gain, where the flagship cryptocurrency asset traded as high as $59,450, to trading currently at $54,000, a $5,450 decline in a matter of hours.
The panic selling is as a result of a new COVID-19 strain that has been seen in Botswana, South Africa and Hong Kong, which experts are calling to be ‘vaccine resistant’. If this becomes true, it will mean the reinstatement of lockdown measures which will hamper economic activities.
As you would expect, Bitcoin’s decline dragged the entire altcoin market down along with it, with many altcoins posting over 10% losses as of the time of this writing. A notable decline of the top 50 coins will be Crypto.com’s CRO token and Avalanche’s AVAX token which are both down approximately 18% and 17% respectively.
What you should know
Richard Lessells, an infectious disease physician at the University of KwaZulu-Natal in Durban, South Africa, told multidisciplinary science journal, Nature, that, “There’s a lot we don’t understand about this variant. The mutation profile gives us concern, but now we need to do the work to understand the significance of this variant and what it means for the response to the pandemic.”
The cryptocurrency market isn’t the only market taking a hit as other exchanges and markets over the world are affected. The FTSE100 is down 2.78% as of the time of this writing, currently at 7,107.98. The United States’ Dow Jones is down 2.21% while the S&P500 is down 1.78% in pre-market skirmish.
The commodities market too is down with both oil benchmarks down over 5%, both closer to the $70 trading mark. Copper is also down 2.70% while Gold on the other is up 1.35% but set to post one of its biggest weekly losses this year.
Binance long liquidations account for the biggest with $266 million, representing 42.22% of the total liquidations. Okex and FTX take second and third spots, accounting for $143 million and 58.25 million respectively.
One would think a decline of this magnitude would mean strength to the U.S. dollar however, this is not the case as the dollar index is down 0.65% currently trading 96.235 basis points, ending its winning streak after trading as high as 96.94 basis points, its highest since June 2020.
Michaël van de Poppe, a Cointelegraph contributor called current price action “beautiful.” He stated, “Beautiful price action #Bitcoin. I like it. Many pumps on markets are getting retraced fully.” He further advised traders not to “chase the pump” on altcoins, as markets showed that repeating volatility remains a key characteristic in the short term.