(Bloomberg) — A period of unusual calm in cryptocurrency markets abruptly ended this week as the idea of higher interest rates for longer triggered a sell-off in risky assets like bitcoin, prompting a mass liquidation of bullish bets
The largest single liquidation order occurred on Binance, Coinglass said on its website, with a value of $55.92 million. CoinDesk reported that the total amount of Bitcoin liquidations was the largest in a single day since the market turmoil of June 2022.
Read more: Hacker Swallowed by Wave of Cryptocurrency Liquidations Loses $63 Million
Bitcoin’s $25,000 level has the highest level of open interest among put options expiring August 25, according to data from Deribit. Should it drop below this level, sellers of these positions will be forced to liquidate or hedge their positions, putting more pressure on prices.
ETF support
The slide has nearly erased the reported gains in the wake of BlackRock’s Inc.’s surprise filing. for the Bitcoin ETF on June 15. After surging 72% in the first quarter, Bitcoin is down nearly 8% since the end of March. The token fell by 64% last year amid a series of scandals and bankruptcies in the industry.
A degree of optimism crept into the market after Bloomberg News reported that the US Securities and Exchange Commission is preparing to allow the first exchange-traded funds based on ether futures.
Read: SEC Set to Greenlight Ether-Futures ETFs in Crypto Industry
The decline in bitcoin comes after a period in which the cryptocurrency traded in a narrow range for several months. Metrics that measure the volatility of the native cryptocurrency’s price are trending lower, with the 90-day volatility reaching its lowest level since 2016 this week, according to data compiled by Bloomberg.
“There was optimism earlier in the week that a decision on the Grayscale Bitcoin ETF would come this week, but that passed without anything coming to light,” said Shiliang Tang, chief investment officer at crypto investment firm LedgerPrime. “Moreover, traditional markets were weak all week with SPX and technology selling off, 10-year interest rates hitting record highs, dollar stalling in bid, and weak credit data and the Chinese economy all being negatives for risky assets.”
– With the help of Sidhartha Shukla and Akshay Chinchalkar.
Most Read from Bloomberg Businessweek
© 2023 Bloomberg LP
