Coindesk Logo

Bitcoin, Ether Volatility Stuns Bears and Bulls Alike; Some Say Recent Price Action Driven by Bank Crisis

Bitcoin, Ether Volatility Stuns Bears and Bulls Alike; Some Say Recent Price Action Driven by Bank Crisis

Bitcoin, Ether Volatility Stuns Bears and Bulls Alike; Some Say Recent Price Action Driven by Bank Crisis

Some market observers say bitcoin’s recent price movements were largely driven by investors looking for alternative assets to park their funds amid a banking clampdown in the U.S.

Some market observers say bitcoin’s recent price movements were largely driven by investors looking for alternative assets to park their funds amid a banking clampdown in the U.S.

Some market observers say bitcoin’s recent price movements were largely driven by investors looking for alternative assets to park their funds amid a banking clampdown in the U.S.

AccessTimeIconMar 15, 2023, 6:13 AM
Updated Mar 15, 2023, 8:43 PM

(Matt Hardy/Unsplash)

10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Higher-than-usual market volatility affected bulls and bears alike as crypto futures racked up $300 million in liquidations in the past 24 hours.

Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. It happens when a trader is unable to meet the margin requirements for a leveraged position (fails to have sufficient funds to keep the trade open).

Large liquidations can signal the local top or bottom of a steep price move, which may allow traders to position themselves accordingly.

Bitcoin and ether briefly inched above $26,000 and $1,770 respectively on Tuesday as investors brushed off the long-term effects of a regulatory clampdown on crypto-friendly banks and U.S. consumer price index (CPI) data pointed to slowing inflation in the coming months.

But the euphoria was short-lived as both major tokens dipped as much as 5% from Tuesday’s highs before gradually stabilizing. In Asian morning hours on Wednesday, bitcoin traded just under $25,000 while ether traded slightly over $1,700.

The volatility caused over $140 million in bitcoin futures and $80 million in ether futures to take on losses. Of this, 58% of futures losses came from shorts, or bets against price rises, while the remaining came from longs, or bets on price rises – meaning both short sellers and long traders were hit almost equally.

Among other major tokens, futures on Conflux’s CFX tokens and Filecoin’s FIL had $8 million and $5 million in liquidations, respectively, as trading volumes for both surged on fundamental developments.

Over $300 million in crypto futures were liquidated in the past 24 hours. (Coinglass)

Meanwhile, some market observers said the price action came as investors looked for alternative assets following last week’s collapse of Silicon Valley Bank.

“Bitcoin’s rally to a new yearly high as Silicon Valley Bank falls and inflation remains stubborn shows that investors are looking to bitcoin for stability in highly uncertain market conditions,” Alex Adelman, co-founder of bitcoin rewards app Lolli, told CoinDesk.

“While many have looked to bitcoin as a hedge against inflation and tracked its price moves accordingly, bitcoin’s relationship to traditional finance is more complex,” Adelman stated, adding that bitcoin worked as an “alternative to the traditional financial system at large.”

“Weakness across the banking sector has heightened investor awareness of bitcoin’s unique value proposition. In the coming weeks, we will continue to see increased demand for bitcoin as a superior system for holding and moving money securely,” Adelman said.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.