The crypto market goes red with over $500 million liquidations in 24 hours

This Friday could be more difficult for the crypto market than previous weeks. The cryptocurrency market has shown signs of improvement recently, which is encouraging. However, that road to recovery has been stalled. On Friday, crypto analytics firm Glassnode released data showing that long liquidations of Bitcoin futures had hit a new eight-month high as the BTC price crashed below $22,000.

The crypto market carnage revisits investors

On Friday, the digital asset market suffered a significant drop, resulting in some key supports being breached. After a strong rally throughout the month, the market has fallen to new monthly lows.

Bitcoin (BTC), which attempted to break through the $25,000 resistance level last week, fell below $22,000 to establish a new two-week low of $21,747. Ether’s (ETH) price had risen above $2,000 in the weeks prior to the merger. However, the price of Ethereum has dropped by 6% in the last 24 hours to establish a new weekly low of $1,726.

In the last 24 hours, 157,098 traders were liquidated after weeks of bullish momentum. This caused total liquidations of over $551 million. Coinglass’ data claims that Bitcoin traders lost approximately $203 million while Ether traders lost around $140 million.

Cryptocurrencies fell sharply as global markets fell following comments from US central bank officials who said they would continue to raise interest rates until inflation is curbed.

Stocks, gold and cryptocurrencies have fallen in recent days as investors adjust their expectations for when the Federal Reserve will raise interest rates. After the June crypto market crash, Bitcoin investors became more optimistic about improved liquidity, fueling a more than 40 percent rise in the cryptocurrency.

As investors call off bets that the Fed will raise interest rates less than previously expected, digital assets are being punished. About $220 million in cryptocurrency positions were liquidated within an hour on Friday, with Bitcoin accounting for about half of that, according to data from Coinglass.

The long liquidations for BTC futures on OKX reached an eight-month high of $84,934,697.05, breaking the previous high observed on May 5 of $48,630,183.66.

US Fed officials weigh in on rate hike in September

Futures linked to the technology-heavy Nasdaq 100 fell more than 1%, and the dollar index rose to a one-month high of 107.77, indicating risk aversion in traditional markets. Shares of crypto-related stocks such as miners and crypto exchange Coinbase fell in pre-market trading.

The latest turn in sentiment has hit altcoins, which are generally more volatile than Bitcoin and Ether, particularly hard. Solana fell 14% on Friday, its biggest drop since June 13. Cardano also suffered a similar percentage loss.

The economic recovery appears to be faltering as traders struggle to decipher the Federal Reserve’s position on interest rates. On Thursday, two Federal Reserve members, James Bullard and Esther George, offered opposing views on the size of the next rate hike. Both agreed on the necessity of continuing to raise borrowing costs.

The sudden fall in the cryptocurrency market is linked to the expected interest rate increase from the US central bank in September. The consumer price index statistics in August came out lower than expected, driving both the digital asset and currency markets into a buying frenzy.

Attention now shifts to next week’s Federal Reserve annual meeting in Jackson Hole, Wyoming. There is already talk that Fed Chair Jerome Powell will take a more cautious approach than his predecessor Janet Yellen.

James Bullard, president of the Federal Reserve Bank of St. Louis, said he would support a 75 basis point rate hike next month. This move could trigger another economic downturn. A similar interest rate hike by the Fed in June caused crypto markets to crash after an initial price rise.

The market’s sluggishness on Friday follows a strong performance in technology and crypto-related stocks since mid-July. Institutional investment continues to flow into cryptocurrency, suggesting investors are becoming more confident amid broader market concerns.

Although the digital market is currently experiencing a macroeconomic downturn, the prices of the most popular crypto projects will not stay low for very long.

In the last 36 hours alone, the digital asset markets have experienced heavy losses, and it looks like this trend will continue through the weekend. In previous months – during the so-called “crypto winter” – weekends were often when the market values ​​of digital assets fell even more. Only time will tell which direction this new field of finance takes.