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Market Volatility Strikes Bitcoin and Ethereum
As the sun rises on Tuesday morning, markets around the world are painted red as Bitcoin experiences a 7% drop and Ethereum lags behind with a 10% decrease. The global cryptocurrency market cap has shrunk by 8% since the previous day, falling below $2.5 trillion. This decline comes after the market came within 5% of reaching its all-time high capitalization, a milestone last achieved in early November of 2021.
At the time of composing this document, the price of Bitcoin stands at $63,142.39, briefly dipping below the $63,000 threshold as reported by CoinGecko. This recent tumultuous period for Bitcoin traders contrasts with the record-breaking high of surpassing $73,000 just last week.
On the other hand, Ethereum has faced an even harsher setback than Bitcoin. Early on Tuesday, Ethereum’s price was recorded at $3,230.05, representing a 10% decline from the previous day and a substantial 20% drop from the prior week. This sudden turn of events unfolded as the Ethereum community geared up for the much-anticipated Dencun upgrade on the mainnet.
Impact on Traders and Market Sentiment
The significant price drops observed for both Bitcoin and Ethereum have led to the liquidation of numerous long positions taken by optimistic traders, as per CoinGlass. Within the span of a single day, long positions worth over $500 million and short positions valued at $100 million across digital asset contracts have been liquidated.
For traders, opening a long position essentially entails a speculation that the asset’s price will rise by a specific date. Ideally, investors aim to sell the asset once profits are realized. However, in severe scenarios, exchanges or brokerages may enforce liquidation if the asset experiences a substantial price decline.
Furthermore, while meme coins previously commanded attention in the market, they have also suffered significant losses in the current downturn. This phenomenon is typical for meme coins, which tend to exhibit heightened volatility compared to more established assets like Bitcoin and Ethereum.
Notably, meme coins associated with Solana, such as Dogwifhat (WIF) and Bonk (BONK), have witnessed declines of 22% and 19%, respectively, within the past day. Similarly, Floki Inu (FLOKI), a Shiba Inu-themed meme coin competing on the Ethereum network, has shed 20% of its value since the previous day.
Even Jupiter, the Solana decentralized exchange (DEX) that recently pledged assistance to Slerf presale participants following a $10 million loss, has seen its JUP token plummet by 16% compared to the previous day’s levels.
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