Bitcoin (BTC) slid more than 3% in just 15 minutes during European morning hours on Wednesday, taking the largest cryptocurrency by market capitalization to below $30,000. Further declines took it as low as $29,000, CoinDesk data shows.
While the sell-off didn't appear to stem from any fundamental reason immediately, an unusually large sell order on crypto exchange Binance and an unexpectedly high U.K. March inflation figure of more than 10% may have influenced market sentiment.
Also in the mix: a so-called long squeeze. More than $25 million in bitcoin futures were liquidated. Longs, or bets on rising prices, made 98% of the positions.
"The hotter-than-expected U.K. CPI may have weighed over risk assets, including BTC. But the gravity of the reaction has been far, far more severe than in other asset classes," Vetle Lunde, a senior analyst at K33 Research, told CoinDesk, using the acronym for consumer price index.
"Seems to be more of a leverage washout. Binance OI in BTCUSDT perps fell 5.1% in 15 minutes, effects more severe in ETH with larger liquidation volume than BTC," Lunde said, referring to open interest, or the total number of contracts in the futures market, and also to perpetual futures contracts.
Prominent pseudonymous crypto Twitter trader @52kskew pointed out that a 16,000 bitcoin sell order, worth over $467 million at current prices, preceded the dump, which may have initiated the long squeeze.
"16K BTC is unusual size to be market sold solely from Binance spot usually the kind of sale happens before bad news comes out," @52kskew opined in a follow-up tweet.
Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of their initial margin. It happens when the investor is unable to meet the margin requirements for a leveraged position, meaning they don't 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.
CoinDesk's Omkar Godbole contributed reporting to this story.
UPDATE (April 19, 09:10 UTC): Rewrites headline; adds analyst comment in third paragraph, U.K. inflation, wider market in last paragraph.
UPDATE (April 19, 10:13 UTC): Adds tweets in the fourth paragraph mentioning Binance's market data.
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