In a dramatic turn of events, Bitcoin’s price crashed to $52,500 on August 5, falling 10% from $58,350 in less than two hours. The rapid decline erased over $600 million in leveraged longs. Despite this, Bitcoin has rebounded slightly and is currently trading at $54,384, according to TradingView.
This is the first time Bitcoin has dipped below $53,000 since February 26, when the market surged following the approval of spot Bitcoin ETFs in the United States. Ether also suffered a steep drop, falling 18% from $2,695 to $2,118, though it has recovered somewhat to $2,358.
In the past 24 hours, the crypto market has seen over $740 million in leveraged positions wiped out, with $644 million in leveraged longs liquidated, according to CoinGlass. Ether traders were hit hardest, losing $256 million in ETH longs, while Bitcoin saw $231 million in long positions forcibly closed.
The downturn coincides with a significant sell-off in the Japanese stock market, where the Nikkei 225 dropped 7.1% in early trading. Japanese bank stocks experienced their worst performance since 2008 following a central bank decision to hike interest rates.
Market commentators attribute the crypto market turmoil to weak jobs data in the U.S., slowed growth in tech stocks, and concerns over mass selling by Jump Crypto. The flash crash also led to a $500 billion wipeout in total crypto market capitalization over three days, the largest in over a year.
The market’s volatility highlights the risks associated with leveraged trading and the interconnectedness of global financial markets, prompting calls for caution among traders and investors.
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