Today, the cryptocurrency market saw a massive crash, and the price of Bitcoins decreased below $34,000. This event led to the liquidation of $500M, which is a significant event. There’s a reason for this to happen, according to several market analysts. Bitcoin’s price is a fluctuating one, and recently it rose by 6.7% to $38,000.
When Bitcoin’s price rises, the funding rate also increases, which usually means the market is overleveraged and overcrowded. In this case, the rate rose to 0.07% compared to 0.01% (the usual rate). Some market players decided to release large sell orders in this situation, resulting in a sharp price drop.
Experts believe the pullback is not over yet, as numerous investors are still waiting to see how things end. It may lead to a further price drop, and if it drops below $30,000, the market’s behavior will be more bearish, says Salsa Tekila, a pseudonymous Bitcoin trader. CEO of CryptoQuant Ki Young Ju also agrees with this notion. He states fear and market uncertainty are the reasons for which these positions are liquidated. He further says that it will be interesting to see where Bitcoin will go from this situation.