Volatility peaks in the crypto market at FUD, liquidations pile up
Volatility in the crypto market is back after a massive dumping and subsequent recovery for digital assets.
Crypto markets shed $70 billion in late trading on April 26. However, they had already started to recover during the Asian trading session on the morning of April 27.
Liquidations are piling up
In total, there were more than $351 million in total liquidations in the last 24 hours, according to Coinglass data. Also, around 73% of this happened in the last 12 hours as panic selling ensued.
The analytics platform reported that it was the largest period of long liquidations in the past month.
Crypto markets recover quickly
A massive selloff saw Bitcoin lose 7% in an hour or so. As a result, BTC prices fell to around $27,690 a few hours ago.
Furthermore, there have been $173 million in Bitcoin liquidations in the last 24 hours. This accounts for around half of the total liquidations. Around USD 78 million in longs and USD 58 million in short positions were liquidated in just 12 hours.
However, BTC has since recovered nearly 5% from that decline to top $29,000 again at the time of writing. As a result, BTC liquidations have fallen to just $22 million in the last four hours since the panic sale.
Crypto sales false alarm
An alert from blockchain analytics firm Arkham Intelligence may have catalyzed the selloff. On April 26, it tweeted an alert that the US government and Mt.Gox wallets had active transactions.
This was then shared across crypto social media, resulting in a panic sale. Shy traders believed that the BTC holdings held by the government in the Mt.Gox wallet were about to be liquidated.
When Arkham revealed that this was a false alarm, the panic subsided and crypto markets began to recover.
However, industry observers have noted that there will come a stage when the US government liquidates this Mt.Gox wallet. DeFi analyst Miles Deutscher commented:
“Today was a false alarm. But at some point in the near future US Gov + Mt. Gox Bitcoin move. Be prepared for when that happens.”
He meant that the government should only keep BTC. “Not sure why they want to sell hard money for a falling shitcoin (USD),” he continued, before adding:
“The smart thing to do would be to collect MORE Bitcoin, and try to re-impose (some) form of monetary standard after screwing things up in 1971.”
The panic dump and pump increased volatility in the crypto market during what has been a relatively calm phase.
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