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The entire cryptocurrency industry lost more than $200 billion from April 1st to 2nd, recording an 8.7% decline in the total market cap of the cryptocurrency space. This led to a significant liquidation of over $770 million.
- Uncover the impact of the recent $200 billion cryptocurrency market plunge and its aftermath on traders and major coins.
- Explore the reasons behind massive liquidations in Bitcoin and Ethereum, and how major exchanges like Binance and OKX were affected.
- Analyze expert predictions on cryptocurrency recovery post-plunge, with insights into technical indicators and market sentiment.
Dropping Prices and Liquidations
On March 31st, Bitcoin rallied up to $71,300 before going into a 2.3% drop on the next day, which was then followed by an additional 6% price decrease on April 2nd, as indicated by data from TradingView. The rest of the cryptocurrencies also followed Bitcoin, with major altcoins like ETH and SOL losing 10% and 10.28% in price, respectively.
The sudden price drop has brought BTC down to $66,000. Which led to a major liquidation event, standing at more than $770 million, according to data on Coinglass. Liquidations in Bitcoin alone add up to $216 million, while Ethereum liquidations stand at $165 million.
Binance – the world’s leading cryptocurrency exchange by trading volume – recorded the largest amount of liquidation, i.e., $341 million in 48 hours. Similarly, OKX saw the second-largest liquidation, at $284 million.
The liquidations were dominated by long positions, amounting to more than $610 million, indicating an optimistic tendency that proved lethal for hundreds and thousands of traders. Short positions contributed to about $158 million. Due to these dramatic liquidations, perpetual funding rates dropped significantly, readjusting BTC spot prices from $60,000 to $72,000.
Apart from the price dips in the major altcoin, meme coins, which had been a driving factor of the crypto market for the past few weeks, also experienced big corrections in price. For instance, Dogecoin – the largest meme coin by market cap – had risen more than 170% since the end of February to reach the price level of 22 cents before crashing down to $0.178. Similarly, dogwifhat – the most popular meme coin on the Solana blockchain – underwent a gigantic rally of almost 1400% before it dropped to the $3.9 level at the time of writing this article.
What’s Next?
The recent price drops and liquidations seem like a sizable setback in the current context. And this pullback could very likely be beneficial in the coming months. “BTC & ETH margined contracts already into the negatives. All leverage must be destroyed before price discovery,” said Jelle, a popular crypto analyst on X.
With Bitcoin at $71,000 and the total market cap of the crypto space having grown from $1.6 trillion to a whopping $2.7 trillion since the start of this year, prices throughout the market were over-extended. The market needed to come down and test the local support level. Before going further up to reach new all-time highs after the Bitcoin halving.
Final Thoughts
Currently, the BTC price sits at $66,000. While the RSI (Relative Strength Index) has come down to a neutral level of 50. On top of that, Bollinger Bands are also constricting. Which previously happened at the $42,500 level right before BTC underwent a 70% surge in price.
The overall market sentiment, along with all these technical indicators, continues to remain bullish in the long term. Experts suggest that despite the recent corrections and liquidation events, crypto investors need to HODL. Hold onto their investments and stay optimistic.
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