Bitcoin (BTC) slumped more than 3% in just 15 minutes in the European morning hours on Wednesday, as the largest cryptocurrency by market cap plunged below $30,000. CoinDesk data showed that further declines took it as low as $29,000.
While the sell-off does not appear to be due to any immediate fundamental cause, the unexpectedly high inflation rate in the UK in March of over 10% may have weighed on market sentiment. Also in the mix: something called the long press. More than $25 million worth of Bitcoin futures contracts have been liquidated — of which 98% are long positions, or price rally bets.
“Hotter-than-expected UK CPI may have affected risk assets, including BTC. But the severity of the reaction was much more severe than in other asset classes,” Vetle Lunde, senior analyst at K33 Research, told CoinDesk. . .
Lunde said, referring to the open interest, or the total number of contracts in the futures market.
Liquidation refers to when an exchange aggressively closes a trader’s leveraged position due to a partial or total loss of its initial margin. It occurs when an investor is unable to meet the margin requirements for a leveraged position, and does not have sufficient funds to keep the position open.
Large liquidations can mark the local top or bottom of a sharp price move, which may allow traders to position themselves accordingly.
The slide triggered a sell-off in the broader cryptocurrency market, with ether (ETH), polygon (MATIC) and dogecoin (DOGE) down 5.3% in the past 24 hours and Solana (SOL) losing nearly 9%.
Update (April 19, 09:10 UTC): retypes the address; And the analyst’s comment in the third paragraph, UK inflation, adds the broader market in the last paragraph.