Cryptocurrency Market Decline

The global cryptocurrency market has faced a significant downturn, driven by rising tensions in the Middle East and concerns regarding the strength of the global economy, which have impacted investor confidence.

Market Capitalization Drop

According to Coingecko data, the market capitalization of cryptocurrency has fallen to $1.94 trillion, marking a drop of over 13% within the last 24 hours. TradingView charts illustrate that this decline is the most substantial daily downturn since January 2022.

In the past 24 hours, 280,093 traders experienced liquidations, with total liquidations across centralized exchanges amounting to $1.07 billion, as reported by Coinglass.

Bitcoin Liquidations

Bitcoin led the market with over $362 million liquidated, of which around $302 million were long positions. At the time of publication, Bitcoin’s price dropped nearly 13%, settling at $52,847. The GM 30 Index, which reflects a selection of the top 30 cryptocurrencies, rose 18.64% to 95.79 during this time.

According to Philip Swift, founder and CEO of Trendstorm, Bitcoin’s price decline occurred after it touched its one-year moving average. “Bull runs operate when the price is above the one-year moving average,” he noted.

Ethereum and Other Liquidations

Ethereum also experienced significant liquidations, amounting to $346 million, with about $297 million tied to long positions. Ether’s price dropped over 20% to $2,321.

Liquidations occur when exchanges close leveraged positions due to insufficient funds to maintain trades.

On-chain liquidations across decentralized finance (DeFi) protocols on Ethereum hit a yearly high, totaling over $350 million in liquidated positions within the last 24 hours, according to Parsec Finance.

Liquidations mostly affected ether collateral, totaling $216 million. Wrapped staked ether accounted for $97 million in liquidations, and wrapped Bitcoin saw $35 million liquidated.

Perpetual Futures Funding Rate Turns Negative

Within the last 24 hours, the bitcoin futures funding rate turned negative, indicating increased demand for short positions, suggesting a bearish outlook among traders regarding bitcoin prices.

The decline in cryptocurrency markets started last week, influenced by geopolitical tensions in the Middle East and mixed earnings reports from tech companies, leading to a risk-off sentiment from investors. For instance, pre-market trading highlighted declines in major tech stocks: Apple down 6%, Nvidia down 8%, and Microsoft and Google down 4.5%.

Additionally, Monday’s slump was exacerbated by the yen climbing to a seven-month high due to anticipation of further rate hikes by the Bank of Japan, with the Tokyo Stock Price Index recording its sharpest drop since 2011.