Bitcoin and ether faced a $1 billion liquidation as Bitcoin dipped to $59,175 before rebounding. Factors include Fed policy and ETF outflows.
Bitcoin saw a significant drop to $59,175 overnight, its lowest mark since early June, before recovering to around $61,500 by Thursday morning. This price volatility led to the liquidation of approximately $1 billion in futures contracts across major cryptocurrencies including bitcoin, ether, and solana, as well as tokenized stocks such as Micron Technology Inc. and Sandisk.
Specifically, bitcoin futures experienced about $430 million in long liquidations, which are forced closures of positions betting on price increases as the market declined.
There was no specific catalyst for this market movement. Since reaching a high of nearly $65,500 on Monday, bitcoin's value has decreased by about 10%. Contributing factors include a hawkish stance from the Federal Reserve, six weeks of ETF outflows, diminished liquidity typical of summer months, and the looming options expiry at the end of the quarter, which traders believe adds to market volatility.
In a recent report, market maker Wintermute identified $59,000 as a key threshold to watch for potential bearish signals.
The rebound in prices was supported by positive news from outside the cryptocurrency market. Micron Technology reported quarterly earnings that surpassed analyst expectations, boosting its stock and positively influencing the memory chip sector.
Additionally, SK Hynix announced plans for a U.S. stock listing, aiming to raise around $29 billion, which would mark one of the largest public offerings to date. Shares of Samsung and Kioxia also increased in Asia following this news.
The AI chip trade, which initially caused a 10% drop in the Kospi index due to spending slowdown concerns, is now aiding in stabilizing the crypto market. Micron’s strong performance indicates that demand for AI memory is driven by structural needs rather than speculative activity.
As the week continues, the end of the quarter poses a notable risk. While bitcoin's recent low of $59,000 has held, there are $1.6 billion in leveraged long positions just below $58,000, suggesting that a breach of this level could trigger further declines. The upcoming PCE inflation report, which is closely monitored by the Federal Reserve, could also influence market direction.
