Bitcoin, other crypto see $360 million sold in one day
Bitcoin (BTC) and other cryptocurrencies suffered a significant blow when the US Federal Reserve’s decision to raise interest rates resulted in the liquidation of hundreds of millions of dollars from the markets.
The collapse of several banks has already led to an increase in liquidity, leading to a reversal of a significant part of the quantitative easing measures in just one week.
Now, market intelligence firm Coinglass reported that in the last 24 hours, almost $360 million in crypto assets were sold. The impact of the Fed’s move reverberated throughout the digital currency world, leaving investors and traders scrambling to adjust their portfolios.
Source: Coinglass
Fed Rate Hike Triggers Bitcoin Liquidation
The Federal Reserve’s decision to raise interest rates by 25 basis points on Wednesday in an effort to counter inflation is believed to have triggered liquidation of cryptocurrency assets.
This comes amid a global banking crisis that has unfolded in recent weeks, which had driven the primary digital currency to a nine-month high above $28,000. On the day of the second FOMC meeting of the year, Bitcoin’s value climbed even higher, nearly $29,000.
But when news of the rate hike broke, the price of Bitcoin briefly fell to the high $26,000 range. Despite this setback, the cryptocurrency has rebounded and is currently trading at $28,309 at the time of writing, data from crypto market tracker CoinMarketCap shows.
Source: CoinMarketCap
Most Notable Crypto Sales
Liquidation in cryptocurrency helps to minimize risk and stabilize markets by ensuring that traders meet their financial obligations. When a trader uses leverage to invest in cryptocurrency, they borrow funds from a broker or exchange to magnify their profits.
However, this also exposes them to greater risk as their positions can be automatically liquidated if their losses exceed the margin. In other cases, a business may choose to liquidate its assets voluntarily in response to market conditions or to free up funds for other investments.
BTC total market cap now at $545 billion on the daily chart at TradingView.com
Digital currency traders sold nearly $33 million worth of Bitcoin and lost nearly $19 million in Ethereum (ETH). Litecoin (LTC) and XRP also saw over $1 million in sales each, with $2.11 million and $1.22 million liquidated respectively.
An important driver of depositor flight is people moving money from savings accounts with low interest rates to accounts in money market accounts with high interest rates (treasury bills).
This foolish interest rate hike will exacerbate depositor flight.
— Elon Musk (@elonmusk) March 22, 2023
Despite calls from influential people, like Elon Muskthat backs Dogecoin, for the Federal Reserve to abandon its interest rate hike approach, the central bank ignored their advice and raised key rates by another 25 basis points, following developments involving Silicon Valley Bank and other banking entities.
– Featured image from KITCO
