Crypto Market Rocked by $1 Billion Liquidation in August: Bulls Charge Back

Crypto Market Rocked by $1 Billion Liquidation in August: Bulls Charge BackOn Sunday, August 4, the cryptocurrency market experienced a violent shakeup, with roughly $1.1 billion worth of crypto bets liquidated, marking one of the largest sell-offs of the year

Crypto Market Rocked by $1 Billion Liquidation in August: Bulls Charge Back

On Sunday, August 4, the cryptocurrency market experienced a violent shakeup, with roughly $1.1 billion worth of crypto bets liquidated, marking one of the largest sell-offs of the year. Data shows that approximately 50% of cryptocurrency derivatives open positions were liquidated during this plunge. Bitcoin prices plummeted as much as 17%, while Ethereum dropped by over a fifth of its value at one point.

This "mega-liquidation" sparked market panic, but surprisingly, Bitcoin and Ethereum bounced back swiftly after the weekend. By Tuesday, both prices had recovered, suggesting that market confidence in cryptocurrencies hadn't completely evaporated.

Bulls Return: Institutional Funds Enter, Bullish Bets Soar

Following the weekend's "liquidation," cryptocurrency traders on offshore exchanges and U.S. over-the-counter desks rushed into the options market to place bullish bets. SwapGlobal's Yevgeniy Feldman stated, "Long positions were heavily liquidated, which was very scary, but on Monday and Tuesday, U.S. hedge funds and institutional players who trade options through OTC desks started placing bullish bets again by buying call spreads for Solana and Bitcoin."

Feldman highlighted that the surge in demand for Bitcoin from Coinbase Global Inc. was a key driver behind the cryptocurrency's rebound. Order book data compiled by SwapGlobal shows that the total commitment amount for buying Bitcoin far exceeded that for selling, with a significant number of buyers waiting to scoop up the cryptocurrency at or below $49,000.

Trumps Political Return: A Crypto Bullish Signal?

Furthermore, the rising possibility of Donald Trump returning as U.S. President has injected a bullish outlook for cryptocurrencies. Trump has been a supporter of cryptocurrencies, and his return to the political arena could potentially accelerate the adoption and development of these digital assets.

Currently, call options with strike prices of $90,000 in September, $100,000 in December, and $100,000 in March hold the largest open interest in the listed market, with a total notional value approaching $1 billion. This signifies a positive sentiment towards the future performance of cryptocurrencies.

Market Expectation: Bitcoin Poised for a Bullish Run in the Second Half

By Tuesday, New York time, Bitcoin prices climbed approximately 4.5% to $56,850. Ravi Doshi, Head of Markets at FalconX, remarked, "For the most part of this year, traders continue to expect a bullish run for Bitcoin in the second half."

Despite recent market volatility, the continued influx of institutional funds and the optimistic outlook on the future of cryptocurrencies have injected fresh hope into the market. Going forward, the evolution of the cryptocurrency market will continue to be influenced by a multitude of factors, including regulatory policies, technological advancements, and market sentiment.