Cryptocurrencies extended losses on Wednesday following a wave of liquidations of leveraged crypto derivatives that sent prices sliding overnight.
The price of bitcoin was last lower by 3.2% at $60,026.37, according to Coin Metrics. At one point it fell as low as $58,080.87. Ether fell more than 2% to $2,525.26.
“There were several large liquidations across crypto derivatives platforms,” said Adam McCarthy, a research analyst at Kaiko. “With prices falling rapidly this can have a cascading effect on longs which can further exacerbate price declines. The market could continue to whipsaw over the next week or so ahead of nonfarm payrolls data next week and as the [Federal Reserve’s] September meeting approaches.”
Tuesday also marked the end of an eight-day inflow streak into spot bitcoin ETFs, he added, with more than $120 million flowing out of the funds, which may have put pressure on the market.
Bitcoin falls under $60,000
On Tuesday evening the futures market had seen $93.52 million in long ether liquidations, which forces traders to sell their assets at market price to settle their debts, in a 24 hour period across centralized exchanges. Some $85.93 million in bitcoin liquidations had occurred.
Bitcoin is now on pace for an 8.5% loss for August, which would make it its worst month since April. Ether is down more than 22% and heading for its worst month since June 2022.
For the year, bitcoin is still up 41%. Ether is holding onto a more modest 10% gain.
“This is exactly the type of whipsaw liquidations and price action we see in bull markets,” said Ryan Rasmussen, an analyst at Bitwise Asset Management. “Bulls get over their skis and get wiped out, then it happens to bears, and so on. When you zoom out, a 5% move in the price of bitcoin is a blip on the radar.”
August, a typically quiet month for crypto and risk assets at large, has been particularly volatile this year. However, cryptocurrencies aren’t strangers to big pullbacks in bull markets. Bitcoin is still safely in the range its been sitting in since April – between $55,000 and $70,000.
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