Bitcoin’s price fell early Saturday, plummeting about $10,000 in less than an hour to a temporary low of $42,000 before rebounding to $45,000.
Bitcoin has dropped by $15,000 in the last 24 hours. Over the same time span, Ether, the second-largest cryptocurrency by market capitalization, plummeted around $1,100.
According to CoinDesk’s price index, the leading cryptocurrency reflected a broader decrease in crypto markets, with some cryptocurrencies plummeting more than 20% in the last 24 hours. The majority of these assets appear to have experienced a severe fall beginning approximately 04:00 UTC Saturday.
The whole market cap is currently hovering around $2 trillion, according to CoinGecko.
The coin appears to have fallen due to spot market selling. The drop caused a long squeeze in the derivatives market, which led to an even deeper drop.
“So far I’ve seen upwards of 4,000 BTC being sold that pushed the market abruptly down,” said Laurent Kssis, a crypto exchange-traded fund expert and director of CEC Capital. “In fact, 1,500 BTC alone was sold in less than a minute at the time of the drop.”
According to Coinglass data, the price decline generated roughly $600 million in bitcoin futures positions in less than an hour. Earlier this week, the market appeared too stretched, with open interest (OI) in bitcoin at an all-time high.
“The bitcoin denominated OI has now remained above 365,000 BTC for more than a month. It is not common to see such a high OI being sustained for such a long duration. This could suggest that the market is currently over-saturated with leverage,” Arcane Research’s weekly note published Tuesday said.
According to Coinglass data, the price decrease has sparked roughly $600 million in bitcoin futures positions in less than an hour. Earlier this week, the market appeared over-leveraged, with open interest (OI) in bitcoin at an all-time high.
Tether (USDT), the world’s largest stablecoin by market cap, briefly rose to $1.025 on the Nasdaq-listed Coinbase exchange, deviating from its regular 1:1 peg.
The market’s drop to its lowest level since late September is the result of uncertainty induced by the Omicron variation of COVID-19 and the Federal Reserve’s (Fed) developing displeasure with excessive inflation. On Tuesday, Fed Chair Jerome Powell indicated that the term “transitory” will no longer be used in discussions about inflation and that the central bank would examine it.