In the past 24 hours, $120 million was liquidated in the cryptocurrency market, 70% of which were long positions.
A large portion of these liquidations are related to the PEPE memecoin and its clones and derivatives. Most of the emoji packages in the market have shown signs of a short-term correction and may plummet at any time.
Fortunately, large-scale liquidations have yet to occur, but investors should remain cautious, especially in light of increased withdrawals from exchanges and recent withdrawals by the Ethereum Foundation and Vitalik Buterin.
The recent frenzy surrounding memecoins like PEPE and its derivatives has attracted a lot of money, resulting in handsome returns for these digital assets. However, as with any highly speculative investment, there is always the risk of a sudden downturn.
This risk has become increasingly apparent as memecoins undergo short-term corrections, leading to massive market liquidations.
The unwinding of long positions shows that many investors who bet on the continued rise of the meme coin were caught off guard by the sudden reversal.
The $120 million liquidation serves as a wake-up call to the potential pitfalls of investing in highly volatile assets, especially in times of market uncertainty.
Bitcoin’s Bullish Momentum
Capriole Fund founder and bitcoin analyst Charles Edwards predicts that a major catalyst could emerge in 2023 to help bitcoin rebound.
2022 is a tough year for cryptocurrencies, with a string of bearish days after the Federal Reserve tightened monetary policy by raising interest rates.
Most recently, the Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday, which sent cryptocurrency prices down. The Federal Reserve has raised interest rates 10 times in a row since March 2022 to curb economic overheating and control soaring prices.
In a new tweet, Edwards said interest rates may not rise because the system is on the brink of collapse.
“The only way for the Fed to compete with Bitcoin is to raise interest rates. But interest rates can’t go any higher because the system is broken. Relentless easing will follow.”
The idea that the Federal Reserve will soon pause rate hikes or possibly lower them before the end of the year has contributed to Bitcoin’s year-to-date gains of more than 70%. This is because traders tend to avoid “risky” investments such as cryptocurrencies, as they expect the U.S. central bank to maintain a hawkish monetary policy to curb inflation.
Last week, Bitcoin made another attempt to breach the closely watched $30,000 mark, but the bulls were unsuccessful.
The price of Bitcoin (BTC) fell to a low of around $28,394 on May 6, but is just above the $29,000 mark.
Source: TradingView
According to Glassnode’s latest weekly report, the market has steadily recovered from the historic bottom discovery phase of the 2022 decline.
Selling pressure from new investors is currently the main driver behind building resistance at $30,000.
If the current correction continues, the base price of $24,400 for new supply holders could be a psychological level to watch in the coming weeks.
- Whale loses over $500,000 after waving PEPE
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