Bitcoin Dips Below $100,000 as Crypto Liquidations Hit $1 Billion
Bitcoin, the largest crypto asset by market cap, dipped to a 7-day low on Thursday evening, triggering crypto liquidations worth over $1 billion. According to CoinGecko’s data, the coin’s price fell to $92,103 within three minutes but has since recovered to $98,034 at press time.
Bitcoin Records 30-Day Gains of 33%
Despite a 24-hour drop of 4.3%, Bitcoin is still up 33% in the last 30 days, thanks to bullish sentiment driven by Donald Trump’s victory in November. Many crypto enthusiasts are optimistic that Trump will fulfill his promise to ‘make crypto great again’ after years of regulatory war initiated by the US Securities and Exchange Commission (SEC).
As mentioned, the latest Bitcoin dip has caused over $1 billion worth of liquidations. Per data from CoinGlass, 80% or about $820 million of the liquidated amount represents long positions (bets placed in anticipation of a bullish move). Notably, traders with long positions on Bitcoin lost $390 million.
Analyst Says the Latest Price Drops Were Imminent
Apollo Crypto’s portfolio manager Pratik Kala says markets were overdue for price drops as funding rates had skyrocketed sharply, indicating they were overheated. For starters, a funding rate is a payment between long and short traders in futures markets. It helps to match a perpetual contract’s price with that of the underlying asset.
When funding rates increase, it suggests that most traders are betting massively on one side, usually longs. In the latest case, the high funding rates indicated that more traders had opened long positions, believing that crypto prices would keep surging. However, the prices went against them, thus prompting liquidations.
Meanwhile, several analysts have advised traders to book profits along the way, arguing that crypto prices will not go higher forever.
What Pushed Bitcoin Above $100k This Week?
The latest price corrections come after Bitcoin rallied above $100,000 on Thursday morning. The surprise rally followed Trump’s announcement about the nomination of Paul Atkins as the next SEC Chairman.
The incoming US President picked Atkins, who previously served as an SEC Commissioner, to replace crypto critic Gary Gensler. The nominee has been described as a crypto-friendly figure who will abandon Gensler’s ‘law-by-enforcement’ approach for a ‘no harm to crypto’ style.
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