The cryptocurrency market experienced a sudden and dramatic sell-off, with over $1 billion in assets being liquidated within just an hour. This unprecedented surge in liquidations affected Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, as their open interest rapidly unwound, signaling increased volatility and bearish sentiment.
Analysts reported that this rapid liquidation event wiped out significant leveraged positions in both Bitcoin (BTC) and Ethereum (ETH). Notably, DaanCrypto highlighted that this is the first time a single candle has witnessed such accelerated market decline, unlike the typically gradual downward trends observed recently.
The selloff pushed Ethereum below its previously crucial $3,000 support level, impacting decentralized autonomous treasuries (DATs) and causing significant unrealized losses for DeFi protocols reliant on ETH holdings for funding and operations.
The market’s sudden downturn has sparked fears of sustained bearish momentum. Fractal price analysis suggests a potential further decline towards the $2,500 zone—a level not seen since early 2023.
The sell-off extends to broader market declines as Bitcoin also experienced sharp losses. This situation raises concerns about the sustainability of funding models reliant on volatile assets within the DeFi ecosystem.
Experts suggest traders monitor crucial macro factors such as Bitcoin’s price movements and broader economic signals for insights into a potential market bottom or continued decline.