By
Chimamanda U. Martha
May 14th, 2024
The market’s volatility led to over $200 million in liquidations of crypto-tracked futures, with $150 million coming from long positions betting on higher prices.
The crypto market experienced a whirlwind of activity this week, with prices soaring to multi-month highs before a sharp decline and subsequent recovery. The rollercoaster ride was fueled by profit-taking among traders and anticipation surrounding chipmaker Nvidia’s earnings report, which ultimately exceeded expectations.
Crypto Traders Lose $200 Million in Liquidations
Bitcoin (BTC) suffered a blow, dropping to $50,700 late Wednesday, while Ethereum (ETH) fell just under $2,890 before rebounding to $51,600 and $2,993, respectively at the time of writing.
Among major altcoins, Polygon’s MATIC saw the most significant losses, slipping 7%, followed by Cardano’s ADA and XRP, which were down as much as 5%. The entire market capitalization dipped before recovering to approximately $2 trillion, showing a 2.18% increase over the previous day.
In terms of volume, the ecosystem currently boasts a total market volume of $82.33 billion, marking a 10.35% decrease in the past 24 hours.
The market’s volatility led to over $200 million in liquidations of crypto-tracked futures, with $150 million coming from long positions betting on higher prices. Short positions, betting on lower prices, were also affected as the market recovered following Nvidia’s financial earnings report for the last quarter of 2023.
The recent volatility also affected AI tokens, which saw increased activity following OpenAI’s introduction of its Sora product last week. The total market cap of AI tokens surpassed $15 billion, with Worldcoin’s WLD hitting an all-time high.
Start of An Altcoin Season
According to a CoinDesk report, some crypto traders had expected the sell-off, viewing the recent decline as a correction rather than a sign of a broader market trend. Alex Kuptsikevich, a senior market analyst at FxPro, a brokerage company headquartered in London, said the recent market decline is a correction of the month’s rally, which saw BTC hit $53,000 for the first time in two years
“Bitcoin has managed to avoid a sell-off without replicating the upward momentum observed in recent days. Technically, Ethereum’s pullback to $2700 is a correction of this month’s rally and should not cause much alarm. A break below these levels could be a cause for concern for these assets,” he told CoinDesk in an email.
While some analysts, like Kuptsikevich, believe that the recent moves in the crypto market are nothing more than a correction, the industry remains divided regarding the start of an altcoin season.
Another analyst, Markus Thielen, head of 10x Research, pointed to Bitcoin’s continued dominance, currently at 51% of the market share, as a critical factor.
He suggested that dominance “needs to fall below 45%” for the altcoin season to begin, indicating a potential shift in capital towards other tokens.