Long Liquidations Hit Three-Month High Amid Crypto Downturn

Written by C, Fiona

Last updated: 2022-04-14

Why Trust BTCC

BTCC, a seasoned player in the cryptocurrency sector, has established a solid foundation of credibility through its over a decade of platform operation and profound industry experience. The platform boasts an experienced team of professional analysts who leverage their keen market insights and profound understanding of blockchain technology to offer precise market analyses and investment strategies to users. Furthermore, BTCC adheres to rigorous editorial standards, ensuring that every report and analysis is fact-based, striving for objectivity and fairness, thus providing investors with authoritative insights they can rely on. In the rapidly evolving cryptocurrency market, BTCC stands out as an indispensable partner for numerous investors and enthusiasts due to its stability, professionalism, and forward-thinking approach.

Leveraged crypto bulls had to take the biggest L since late January, after $428 million longs were liquidated. Coinglass data showed long liquidations hitting their highest since 22 January on Monday as the broad crypto sell-off continued.

In recent weeks, crypto bulls have been on the back foot, and yesterday’s price drop delivered another body blow to their ambitions.

The $428 million worth of liquidated longs were the most lost since January 22, when $470 million long positions were liquidated. Like in late January, this liquidation wave was the second in quick succession. Back then, liquidations came on back-to-back days, wiping out more than $1.4 billion worth of longs. This time, bulls had a bit of a breather after more than $400 million worth of long liquidations followed by yesterday’s low blow.

Is the Biggest Turmoil for Crypto Yet to Come?

Equity markets were down across the board, with the Dow closing 1.19% lower while the Nasdaq dropped 2.18%. Markets in Japan and Singapore were also down as traders braced themselves for additional pain on the horizon.

The culprit, of course, is inflation.

Remarks by White House Press Secretary Jen Psaki warned of “extraordinarily elevated” inflation data ahead of the new CPI numbers coming out on Tuesday.

While estimates put year-on-year inflation data in March to exceed 8%, traders may anticipate even worse — with the corresponding knock-on effects for capital markets.

Rising inflation numbers have also led to more hawkish talks from Fed officials, and markets now anticipate more than eight rate hikes in 2022 alone. While the White House has branded accelerating inflation as the “Putin Price Hike,” due to rising commodity prices following the war in Ukraine.

For crypto, none of this is positive news. As crypto markets rocketed upwards with expansive monetary policy, they may fall back down as the Fed puts the clamps on cheap money. Although the technology is in a much better place now than it was at the end of Bitcoin’s last bull run, traders expect more downside in the short term. Arthur Hayes, a high-profile crypto investor, predicted $30,000 Bitcoin and $2,500 Ethereum at the end of Q2 in his latest essay called The Q-Trap.

Crypto bulls may want to go easy on the leverage in the coming weeks if they want to avoid a third liquidation record in short succession.