The crypto market saw nearly $248 million liquidated in just four hours, coinciding with Iran’s attack on Israel. Long positions were the hardest hit, accounting for $221 million of the $248 million, while short positions accounted for $18 million. The sudden drop, driven largely by geopolitical risks, caught the attention of crypto traders and highlighted the ongoing volatility of the market. As the liquidations unfolded, Bitcoin, often referred to as “digital gold” and a “safe haven” in times of crisis, proved itself to be unworthy of that title. Instead of holding steady or even strengthening during geopolitical instability, Bitcoin began to take a downward trajectory. This disappointed traders who had hoped that Bitcoin would serve as a hedge in uncertain times. The crypto market’s fear and greed index has once again dropped into the “fear” zone, to 42 points out of 100. It has not been below this mark since September 17.
Various tokens have fallen significantly in price as the crypto market has responded to the escalating conflict. The Ethereum (ETH) rate has fallen to $2,420 in 24 hours. The altcoin has fallen by 6.3% in 24 hours, with the coin trading at around $2,480 at 15:30 Hong Kong time. Well-known tokens such as Shiba Inu, Polkadot, and Worldcoin (WLD) have suffered losses of between 2% and 4%. Ethereum Classic (ETC) and Strike (STRK) have shown an even sharper decline, falling by more than 4%. Dogecoin (DOGE) has fallen the most, by 8.2%. Tron (TRX) saw the smallest decline, down 1.4%. Toncoin (TON) fell 5.4%.
The massive nature of the losses suggests that the liquidation affected the entire cryptocurrency market. This liquidation event highlights the dangers of leveraged trading, where falling prices trigger margin calls, leading to the selling of more assets, which accelerates the downward momentum. As liquidations accumulated, traders who, on the other hand, held highly leveraged positions were exposed to risk, increasing overall volatility in the market.
The total capitalization of the crypto market during this time fell by $130 billion, to $2.327 trillion. The vast majority of cryptocurrency quotes from the top 100 fell into the “red zone”, digital assets, according to CoinGecko, fell in price following the leading cryptocurrency. Oil and gold quotes, on the contrary, rose sharply. Prices for December futures for both assets went up.
Crypto market analysts had previously given an optimistic forecast regarding the current dynamics of Bitcoin, saying that many factors would contribute to its growth. However, experts warned that the high probability of escalation of the conflict in the Middle East remains a negative factor.
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