It was carnage!
More than $1 billion in crypto positions were liquidated in the worst single day decline since the FTX collapse last year.
Bitcoin was involved, plunging 8%! Many other coins were involved too. It sparked a $1.36B crypto “flash crash.”
Crypto exchange OKX accounted for the most significant portion of liquidations over this period ($308 million). Binance accounted for $189 million.
It is thought that growing turmoil in broader financial markets was to blame, along with cryptos inherently volatile nature.
The collapse of Chinese property giant Evergrande also played a part. The company is the most heavily indebted property developer in the world (approx. $300 billion!) It filed for bankruptcy in New York.
Phew!
The crypto roller coaster continues to zip along at breakneck speed once again!
Such sharp market moves demonstrate the inherent volatility in the crypto sector. But as can be seen by the Evergrande example, crypto is affected by both its own niche, as well as what goes on elsewhere in the traditional markets and global economy.
It means regular investors and institutions might tread cautiously.
Historically, flash crashes have prompted the call for better regulation in the crypto space. Well, those are on the way, as anyone who follows Trades of the Week will know by now.
The good news of course, is that these incidents, though alarming, have been a part of the crypto journey since they were first launched. Therefore, the savvy investor will be focusing on the long-term picture and will not be panicking.
They will be keeping a close eye on positions and following the proven strategy – i.e. buying more if the price drops!
If you’re new to investing – that strategy is one you should never forget if you want to be successful with your investments.
We mentioned the roller coaster, well just as this dip occurred there was other developments that took us back up – with the news that the SEC (Securities and Exchange Commission) in the US is poised to allow the introduction of Ether futures ETFs in the States.
This is BIG because it signals a significant step forward for the mainstream adoption of Ethereum. It solidifies Ethereum’s position in the broader financial market. It indicates growing trust and integration.
Lastly this week, Coinbase finally won approval to list crypto futures in the US. More than $100 million in assets were bridged to its’ Layer-2 blockchain Base. This has got everyone sitting up as Ethereum’s scalability issues have been a concern for many. Base seeks to address that and could set a trend for other platforms to innovate and enhance the Ethereum network.
High Volatility vs Limitless Opportunity – that is the crypto world.
But remember, if you are on the verge of making your first crypto investment, you MUST do your own research.
Also, make sure you use the Price Cost Averaging calculator to help you determine the right amount to invest and the best frequency to do so. This will help you stay on track to reach your financial goals.
Check out this week’s Trades of the Week to get the full story.
