The crypto market continues to plummet, leading to $500 million in liquidations in a day

01.09.2022 1 min 0
Coins rating - The crypto market continues to plummet, leading to $500 million in liquidations in a day

On August 19, the crypto market's total capitalization fell by 9.1%.

On August 19, the crypto market's total capitalization fell by 9.1%. The last time the market fell below the $1 trillion level was just three weeks ago, which means investors were fairly certain the June 18 low of $780 billion was just a distant memory.

 

The cryptocurrency market's correction on August 20 affected all of the top 5 crypto assets by market cap. Bitcoin (BTC) fell by 9.7% to test $21,260, while Ether (ETH) saw a 10.6% drop to an intraday low of $1,675.

 

After several weeks of bullish sentiments, the market experienced a flash crash recently, with over 157,098 traders losing their positions in the last 24 hours. Coinglass data shows that Bitcoin traders lost the most ($203 million), followed by Ethereum traders ($140 million).

 

The following chart shows that the number of long positions liquidated significantly exceeds the number of short positions, indicating that the market sentiment was quite bullish before the sudden crash.

 

The sudden drop in the cryptocurrency market is due to the expected increase in interest rates by the US Federal Reserve. A Fed rate hike next month could lead to another downturn. A similar 75 basis point interest rate hike in June led to turmoil in the cryptocurrency market after the initial price surge.

 

Furthermore, regulatory uncertainty escalated on August 17, after US lawmakers released a document expressing concern that Proof of Work mining could increase demand for fossil fuels. As a result, mining companies have been asked to provide information on their energy consumption and average costs.

 

The impact of cryptocurrencies on the environment and the economy continues to be a focus for governments worldwide.