On the night of August 17 to 18, altcoins’ prices experienced a significant crash.
According to crypto analytics platform Parsec, the DeFi chain experienced liquidations exceeding $75 million within the last day. This marks the highest point in liquidations for the year.
Over $54 million worth of ETH was liquidated. On a side note, if the price of ETH drops to around $1,480, collateral worth approximately $268 million will face liquidation.
The reasons for the crash might be several.
US Treasury bond yields reached their highest point since October
On August 16, the Federal Reserve System published its protocol, “Minutes of the Federal Open Market Committee.” The joint meeting took place in the offices of the Board of Governors on Tuesday, July 25, and continued on Wednesday, July 26.
The document states that the Central Bank projects the possibility of additional rate hikes if a significant decrease in inflation does not occur. After the “minutes” were made public, United States Treasury bond yields reached their highest point since October.
On August 16, Bitcoin’s price went down from around $29,200 to $28,700.
Space X sold $373 million worth of Bitcoin
On August 17, at 3:22 pm ET, the Wall Street Journal reported that Elon Musk’s space company Space X sold $373 million worth of Bitcoin. The company held the token on its balance sheet in 2021 and 2022.
The prices started dropping at 5:40 pm ET, two hours and 20 minutes after the report was published. Bitcoin’s price crashed from around $28,553 to approximately $25,166 in four minutes on the cryptocurrency exchange Binance. On lower liquidity exchanges, the price dipped even lower, reaching $24,400, which led to even more liquidations.
Elon Musk originally reportedly purchased Bitcoin for around $28,000–30,000. His company, Tesla, best known for electric vehicles and solar panels, also owned Bitcoin. Since 2021, the company has sold $936 million worth of the cryptocurrency.
Whale selling significant amounts
As reported by Cointelegraph, a pseudonymous derivatives trader, @TheFlowHorse, shared that a single significant seller potentially triggered the abrupt downward movement, subsequently leading to increased pressure on derivatives.
“It was not just a natural cascade. Someone big bailed for a purpose and set it in motion. Spot volume barely compared to perps,” shared the individual with Cointelegraph.
Evergrande Group bankruptcy
On August 17, at 8:30 pm ET, CNN reported that the Chinese real estate giant Evergrande Group filed for Chapter 15 bankruptcy protection in New York. Evergrande’s default had a significant impact on China’s real estate sector and the broader economy. The real estate sector has been a crucial growth driver for China, contributing up to 30% of the country’s GDP. Following Evergrande’s collapse, other prominent developers in China also defaulted on their debts. Overall, the country has faced an economic slowdown, which might have led to individuals dropping crypto.
Both BTC and ETH faced a significant drop in prices. In the last 24 hours, Bitcoin lost 7.53% of its value, and Ethereum lost 6.73%. At the time of writing, Bitcoin was worth $26,542, and Ethereum traded at $1,680.
The market is encountering challenges due to a scarcity of funds for buying and selling. Interestingly, even positive news releases aren’t significantly boosting prices in the short run. This loss of confidence intensified when the Bitcoin price dipped below $29,000.
Both BTC and ETH experienced a significant increase in market uncertainty, implying that people are expecting major price changes. However, once the market calms down, this heightened uncertainty is expected to decrease rapidly.
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