Bloomberg News reports that Bitcoin struggled to hold above the closely watched $20,000 level, extending a market volatility period that has seen huge swings on the weekends.
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The biggest cryptocurrency dropped by as much as 4.8% Monday and traded at $19,914 in London as of 7:32 am. Ether shed 7.8% at one point but was holding above $1000. Solano, Dogecoin, and Cardano, the altcoins plunged.
Bitcoin plunged by almost 15% on Saturday and then rebounded above $20,000 with a rise of the same magnitude on Sunday. The swing patterns indicate that investor sentiment is remaining highly delicate as the Federal Reserve and the other central banks go all out to battle inflation with the rise in interest rates that will be draining liquidity from the markets.
The T3 Bitcoin Volatility Index, a measure of the token’s anticipated 30-day volatility, had surged back to the mid-May highs when the TerraUSD collapse stablecoin was found rocking the markets.
Feroze Medora, APAC’s trading director at Cameron and Tyler Winklevoss’s Gemini crypto platform, said on Monday in a note that a toxic mix of surging interest rates coupled with bad news cycles have caused disruptions in the crypto market, and more volatility is expected around the forthcoming weeks.
Bloomberg News reports that as Bitcoin was found crashing below $20,000 in the past week since late 2020 for the first time, attention has shifted towards a series of liquidations threatening to make the crypto rout worse. A total of $879 million worth of liquidations were found over the weekend, as per data from Coinglass.
Chasing Liquidations
The current trading platforms in Ether and Bitcoin imply some large crypto holders are chasing liquidations to enjoy the profits by chasing out other crypto players in the market. The chief executive officer of ALEX, the decentralized finance platform Chiente Hsu, stated this.
There is intense pressure on DeFi applications which is further adding uncertainty. Its popularity as an avenue for high yields surged when the pandemic-era stimulus was found to drive a record-breaking boom in the crypto market.
Now they are compelled to turn to unprecedented measures to protect themselves against the liquidation-driven chain reactions. On Monday, Celsius Network Ltd, the embattled crypto lending platform, stated that it requires more time to stabilize liquidity and operations after freezing deposits in the first half of June.
