Early this morning, the price of Bitcoin plummeted, losing almost $10,000 in less than an hour to a temporary low of $42,000 before bouncing up to $45,000. It is currently trading for around $47,500. Ethereum, the second largest crypto by market capitalization, lost over $1,000 over the same time period.
Every single Top 100 coin has plummeted
Every single cryptocurrency in the top 100 by market cap with the exception of stablecoins has lost value. Most coins lost over 20%. According to CoinDesk, the majority of these assets suffered a sharp decline starting around 04:00 UTC this morning. CoinMarketCap data show the overall market cap is currently at $2.18 trillion, down from $3 trillion recently.
Cryptos killed by spot market selling
The coin killer seems to have been spot market selling, driving cryptocurrencies down in advance of triggering huge stop loss in the derivative markets. Laurent Kssis of CEC Capital told CoinDesk:
So far I’ve seen upwards of 4000 BTC being sold that pushed the market abruptly down. In fact, 1,500 BTC alone was sold in less than a minute at the time of the drop.
Price drop caused $600M BTC futures positions in an hour
According to Coinglass, the price decline resulted in almost $600 million worth of Bitcoin futures positions in less than an hour. Earlier this week, the market seemed over leveraged with increased Bitcoin open interest (OI).
According to a report by Arcane Research, published Tuesday:
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.
Safe haven Tether spikes on Coinbase
Tether (USDT) saw a brief rise to $1.025 on Coinbase despite its 1:1 peg to the USD. Tether is the world’s biggest stablecoin by market value. At times of sharp price drops, investors flock to Tether as a safe haven considering its fiat peg.
Omicron variant alarms markets
Markets haven’t been lower since late September. According to analysts, the main reason involves uncertainties over the new, highly dangerous Omicron variant of COVID-19. The Federal Reserve’s (Fed) increasing concerns over high inflation also contribute.
El Salvador buys dip again
Today, El Salvador President Nayib Bukele announced another purchase of Bitcoin in large amounts. The country, which holds Bitcoin on its balance sheet, will buy 150 BTC for just under $49,000 per BTC.
