U.Today – A series of corrections and liquidations in the cryptocurrency market caused a significant setback, resulting in a loss of $100 billion in market capitalization. Recent data shows this dramatic decline, with market capitalization falling from $3.82 trillion to $3.62 trillion in a matter of hours.
Such a sharp decline is indicative of more general structural issues, primarily related to market-wide overleverage. The major cryptocurrency at the center of this turmoil is . Despite previously showing resilience, its chart now shows it is in a significant correction phase.
The psychological $100,000 level turned out to be a strong barrier, beyond which Bitcoin was unable to sustain the rally. As whales begin to book profits, short-term bullish momentum begins to wane, putting further pressure on assets. Bitcoin is currently trading below the key EMA, increasing the likelihood of further declines, at least in the short term.
The main cause of this collapse is overleverage. According to Liquidations Heatmap, of the $1.58 billion in liquidations over the past 24 hours, a total of $172 million was made solely in Bitcoin. Most of these liquidations were due to short positions, indicating that the market's aggressive long positions are facing resistance. When prices fall, this imbalance intensifies volatility and sets off a chain reaction. There were also large-scale liquidations. In a similar manner, $229 million was lost.
The situation in the altcoin market as a whole is not getting any better, as assets such as and are also under downward pressure. As this liquidation cycle highlights, the current bull market driven by overly optimistic market sentiment is fragile. According to the market, a healthy adjustment is clearly needed.
This step is necessary to reset overextended positions and build a stronger foundation for future expansion. Although the overall outlook for cryptocurrencies remains positive, there is likely to be more volatility in the short term as the market corrects.
This article was originally published on U.Today
