In the wake of the latest price declines in Bitcoin and major altcoins, investors who made leveraged bets in the notoriously volatile markets are suffering a large amount of pain, resulting in about $340 million in liquidations just for today.
As bitcoin dropped below $40K for the first time since September, more than 106,000 trades were liquidated on Monday. BitMex had the largest liquidation, valued at $5.95 million.
During the past week, prices of the flagship crypto dipped for six straight days after the minutes of the United States Federal Reserve’s meeting revealed policymakers discussed aggressive interest rate hikes and accelerating the normalization of their balance sheets.
A small recovery over the weekend did not prevent the pioneer crypto from falling again on Tuesday.
FTX data shows Bitcoin changed hands at above $40K at press time, down about 1% in the past 24 hours. In the early hours of the day, the most valuable crypto fell below $40K briefly before moving back above $41.5K.
Risk assets like equities and crypto are predicted to be negatively affected by tighter financial conditions, as they become less attractive than safe-haven bonds.
In the wake of the Federal Reserve’s December meeting, investors reacted strongly to expectations of monetary tightening. This period was marked by high volatility in the Bitcoin price.
Other than Bitcoin, the major cryptos all experienced a down day on Monday. At one point, Ethereum, the second-biggest crypto by market valuation fell below $3K, but has since recovered to above $3K.
