After failing to rebound above $ 54,000, the price of Bitcoin (BTC) fell unexpectedly on Tuesday 23rd. The downtrend caused panic in the market as BTC widened losses below $ 47,000 to $ 44,817 on Bitstamp at 11:00 GMT.
However, at the time of writing, Bitcoin price is trading around $ 48,439 after falling 3.67% in the past 24 hours.
It’s worth noting that BTC had given investors cause for concern the day before after forming a 13% red candlestick on the 4-hour chart.
As a result, February 22nd became a record day for Bitcoin daily trading range. At some point, the price will deviate from the opening price by $ 10,877. In contrast, the average range of BTC for the current year is $ 3,765.
Wave of liquidations
Just hours ago, Bybt’s data showed a mass liquidation of positions in the crypto market amid a sharp decline in all major currencies. According to the data, 645,278 positions worth $ 5.6 billion have been liquidated in the market in the past 24 hours.
Liquidations occur when the leveraged futures position falls below a certain threshold. For example, a 10x leverage position would become worthless or liquidated if the BTC price fell 5%.
The lion’s share of those liquidations in Bitcoin was $ 2.41 billion. In addition, market participants have liquidated positions in ETH for USD 1.35 billion and for Litecoin (LTC) and Ripple (XRP) – almost USD 200 million for each of the currencies.
The sharp price correction also hit the decentralized financial sector (DeFi). DeBank said the total size of all assets blocked in DeFi Logs (TVLs) decreased from $ 44 billion to $ 36 billion. The DeFi market lost 18% of its value in one day.
The Elon Musk Effect
Some members of the crypto community combine the current market dynamics with the “musk effect”. Recall that the head of Tesla recently disappointed many participants in the crypto market with his unexpected skeptical statements that the prices of BTC and ETH “appear high”.
Elon Musk has long been rightly regarded as one of the most influential figures in the crypto industry. Recently, his comments resulted in DogeCoin gaining more than 800%. He also became one of the drivers behind the latest Bitcoin rally to new highs.
Hence, only time will tell whether the current situation is a natural correction of an overheated market or a response to Musk’s comments.
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