Tough day for the cryptocurrencies. Bitcoin loses the $60,000 threshold with a 4.1% drop in the last 24 hours, while the ethereum (ETH) falls 4.3% and barely manages to hold on to US$2,500.
Among altcoins, market sentiment also dominates red with the leadership of Near Protocol (-5.1%), Solana (-4.4%) and Bitcoin Cash (-3.5%).
Why are cryptocurrencies falling?
It is not clear what has caused the sell-off in the cryptocurrency space. The sudden drop triggered liquidations worth over $300 million in leveraged crypto derivatives positions over the past 24 hours, the largest liquidation since the Aug. 5 crash, according to data from CoinGlass. Specifically, ETH traders saw positions worth over $100 million liquidated in liquidationswhile BTC’s endured liquidations of over 90 million.
CoinGlass data shows that eOpen interest in bitcoin futures fell to $31 billiondown from $34 billion on Monday, as asset prices fell, indicating that trader sentiment has waned. Open interest refers to the number of unsettled futures and shows whether new money is entering or leaving the market.
On the one hand, there is some concern that the US government has again sold some of its bitcoin holdings. In recent weeks, sales by the US and German governments pushed prices down. The positions of both countries are worth several billion dollars, so it is expected that bitcoin will suffer if both governments decide to divest their tokens again.
Some analysts also point out that the consolidation phase the situation in which bitcoin is located after reaching its historical highs in March is putting tests the patience of investors. However, other experts point out that these phases have been seen in all previous bull cycles, as well as that the current low volatility phase for BTC may be an indicator that the asset is ready for a precursor to an upward breakout.
Toncoin rebounds
On the other hand, it should be noted that toncoin (TON) rebounds after the arrest of Pavel Durov, CEO and founder of Telegram, although it is up a tepid 1.2% in the last 24 hours. So far this week, it has lost more than 18%. We remember that the messaging application is closely linked to the TON blockchain and some market observers believe that it will continue to suffer until this situation is resolved.
However, the toncoin problem seems to be a minor one compared to the difficulties faced by altcoins. According to Charlie Morris, founder of ByteTree, Altcoins could fall much further before recovering and offer better returns than bitcoin.
During previous market cycles, altcoins followed the bitcoin rally six months after the Bitcoin network halving, which last took place in mid-April. This, Morris notes, would point to a potential rally later this year around October.
Source: Ambito
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