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Crypto market stabilises after $700M liquidations

Crypto market stabilises after $700M liquidations

GrafaGrafa2024/10/04 17:50
By:Mahathir Bayena

The cryptocurrency market is displaying increased stability after a turbulent week marked by heightened volatility, according to analysts at Coinbase.

Following a significant period of liquidations and an overall retreat from risk assets, the market now appears more balanced.

The future dynamics of the market will depend heavily on upcoming macroeconomic factors, such as the U.S. Federal Reserve's stance on interest rates and the upcoming U.S. elections.

"We believe the market is now directionally more balanced as investors digest numerous potential macro catalysts. This lighter directional positioning is evident in the proportional bid/ask depths of Coinbase's BTC/USD order book," stated Coinbase analysts David Duong and David Han.

Earlier this week, the market experienced a sharp decline, with over $700 million in long liquidations during a sell-off triggered by escalating geopolitical tensions in the Middle East.

Iran fired more than 180 missiles at Israel in retaliation for military actions in Lebanon, resulting in Bitcoin’s (CRYPTO:BTC) sharp drop on Tuesday.

The liquidation event marked the highest weekly liquidation level since early August, when Bitcoin dropped from $70,000 to below $50,000 due to the yen carry trade unwind after a Bank of Japan interest rate hike.

According to Coinbase analysts, investors might adopt a "wait and see" approach as they assess U.S. monetary policy.

The Federal Reserve’s cautious stance on interest rate cuts, as suggested by Fed Chair Jerome Powell earlier this week, will play a key role.

In addition, the upcoming U.S. presidential elections will be a crucial factor influencing market sentiment, as both political parties have shown support for cryptocurrencies, potentially leading to a more favorable regulatory environment.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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