The cryptocurrency market experienced a tremor on July 4th as Bitcoin (BTC) dipped below $58,000 for the first time in over two months. The price briefly fell as low as $57,874 on major exchanges like Coinbase. While the price has since recovered slightly to around $58,964, it remains down 3.4% for the week.
This sudden price drop is believed to be linked to the liquidation of leveraged long positions, which essentially involve borrowing capital to amplify potential gains. CoinGlass data reveals that over $54.9 million worth of these Bitcoin long positions were liquidated within the last 24 hours, likely by traders who were expecting a price increase.
The turmoil extended beyond Bitcoin, impacting Ethereum (ETH) as well. Investors anticipating the launch of several spot ETFs for ETH, expected as early as mid-July, also saw their long positions liquidated. This resulted in over $57.9 million in ETH long positions being liquidated in the same 24-hour period.
The recent collapse of Japanese crypto exchange Mt. Gox has been blamed for contributing to the wider market pullback. The exchange is scheduled to begin repaying its creditors approximately $8.5 billion worth of Bitcoin starting in July. However, some analysts believe these repayments may not have a significant negative impact on Bitcoin’s price.
The sell-off wasn’t exclusive to major cryptocurrencies. Leading altcoins like Binance Coin (BNB), Solana (SOL) also experienced significant price drops. BNB fell by 6%, while SOL witnessed a steeper decline of 10.3%.
Interestingly, amidst the market volatility, social media has seen a surge in mentions of “buy the dip,” a common phrase used by investors who believe a price drop presents a good buying opportunity. The use of this phrase reportedly doubled across platforms like Reddit, X, and 4Chan in the last two days.
Only time will tell how long this market correction will last and how high the “buy the dip” sentiment will translate into actual buying pressure.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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