The global crypto market has experienced significant turbulence, sparking concern over digital asset investments. Bitcoin (BTC) recently dipped below $104,000, resulting in the liquidation of over $600 million in bullish futures. This marks the largest losses since February, with a total of $688 million in liquidations reported in just 24 hours. Analyzing the data further, 89% of these liquidations were from long positions, showcasing the bullish yet volatile nature of the market.
Stagflation Concerns and Market Reactions
Bitcoin-related futures losses topped $153 million, followed closely by Ethereum (ETH) with liquidations around $122 million. Not far behind, Solana (SOL) traders faced $33 million in losses, while XRP and Dogecoin (DOGE) futures were hit by $30 million and over $22 million, respectively. The largest individual liquidation was a $12.25 million BTC/USDT order on the OKX exchange, according to data from Coinglass.
Alex Kuptsikevich, chief market analyst at FxPro, noted that the markets turned bearish due to fresh U.S.-China trade tensions. President Donald Trump accused China of violating a trade agreement, leading him to increase tariffs on steel and aluminum to 50%. This action sent ripples through global markets, particularly affecting digital asset investments.
Most Chinese steel is already under tariffs according to Reuters. However, Trump’s latest moves have brought renewed focus on trade between the U.S. and China, with potential consequences for crucial minerals and overall relations. In response, the broader crypto market saw a sharp sell-off, with Ether dropping nearly 4%, XRP and Solana both seeing 4-5% declines, and Dogecoin falling more than 8%.
Despite this, there’s noticeable interest in leveraging digital assets; Deribit data indicates that open interest in Bitcoin futures has surged 51% since April, while options have seen an impressive 126% increase. This points to growing investor appetite for digital asset investments, though whale activity suggests profit-taking as these large holders offload coins to exchanges.
This wave of liquidations, a hallmark of market extremes, might precede a price reversal if market sentiment has skewed too much in one direction. Yet, the combination of new trade disputes and an edgy derivatives market means traders should prepare for ongoing volatility.
At Bakara Invest, our analysis suggests that ongoing trade tensions and market sentiment could lead to continued volatility, prompting investors to reassess their digital asset investments with cautious optimism.
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