- Panic ensues in the crypto market as investors lose over $140 billion.
- The dip in prices led to the loss of investor funds when Bitcoin lost over $10.000 of its value.
- Other Altcoins such as Ethereum, Litecoin, Chainlink, and Stellar also lost a huge percentage of their value.
The cryptocurrency industry is a very volatile market and if we’ve learned anything over the last few years is that gains can quickly vanish as fast as they came. In recent weeks, the whole market has been experiencing a bullish trend until things turned around with the market facing a price correction.
This price correction resulted in the falling values of coins such as Bitcoin, Ethereum, Litecoin, and Stellar. Particularly, Bitcoin lost over $10,000 to trade at $48,000 in a move that cost investors over $140 billion in losses.
How $140 Billion Vanished Into Thin Air
After the impressive price rally of popular coins, the dip happened to trigger a general loss of value, panic sell-offs, and mass liquidation by both retail and institutional traders.
Bitcoin’s dip in value accounted for a large portion of the whopping $140 billion loss suffered by traders during the price correction. In a single day, over 425,586 trading positions were liquidated with the largest liquidation order valued at $20.66 million on Huobi-BTC.
Margin trading also accounted for the high-value losses suffered by traders. Traders who took out leverage with the belief that the bullish trend will continue were forced to liquidate their assets seeing that they do not have enough funds to cover the sharp losses.
In the face of rapidly falling prices, margin traders were forced to liquidate their positions to cut their losses. These liquidations resulted in massive losses running into over $140 billion.
According to 36data from Coin0, at one point during the dip, investors lost $40 billion an hour. As a result of the high risks associated with margin or leverage trading, beginner investors have been warned to be cautious or avoid it in total.
On The Flipside
- Square looks to beef up its Bitcoin holdings by purchasing $170 million of the asset says its CEO, Jack Dorsey.
- Dogecoin climbs by 25% after Elon Musk dropped a series of tweets about the currency.
The Reason For The Price Correction
Historically, after a burst in the increase of prices in cryptocurrencies, a price correction follows. Analysts observed that it was inevitable for the correction in prices not to occur as it was only a matter of time.
It can also be argued that the reason for this dip is as a result of huge opportunities for profit taking by investors. This is a fairly common phenomenon in the market where traders seek to reap the rewards by selling off their holdings.
However, a cross-section of traders remains optimistic with the belief that this blip is only a small hiccup in the grand scheme of things. They hold this opinion because of the large number of institutional investments wading into the cryptocurrency waters with more companies actively buying the dip.
For instance during the dip, Square reportedly purchased $170 million worth of Bitcoin. If more institutional investors are buying cryptos, the market is bound to gain traction and daring investors look set to recoup their $140 billion losses.