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Cryptocurrency Market Tumbles in May
The cryptocurrency market kicked off the month of May on a negative note, with Bitcoin plummeting to a two-month low of less than $56,500. This downturn extends the bearish trend observed in April, making it Bitcoin’s most challenging month since the November 2022 crash triggered by the FTX exchange’s collapse.
Market Analysis
According to data from CryptoSlate, Bitcoin’s price experienced an 8% decline in the past 24 hours but managed a slight recovery to $57,115 at the time of reporting. This decline in Bitcoin’s value reflects a broader market trend, with other major cryptocurrencies like Solana, Ethereum, Cardano, and Avalanche also witnessing losses exceeding 7% during the same period.
Interestingly, Polkadot’s DOT token, among the top 20 cryptocurrencies by market capitalization, showed a modest gain of 0.41% amidst the overall market downturn.
Market Influences
Analysts attribute the recent market movements to the hawkish policy shifts in the United States and waning interest in spot Bitcoin ETFs, despite their recent launch in Hong Kong. However, Markus Thielen, the head of research at 10x Research, pointed out a unique aspect of this market correction.
“This correction is very different, as institutional investors have a risk management approach that differs from most retail traders. Based on our estimates, the average entry price of the US Bitcoin ETF holders is approximately $57,300—potentially even 1-2% higher – a level that Bitcoin prices are approaching fast.”
Liquidations and Losses
Coinglass data reveals that the market downturn resulted in liquidations exceeding $450 million from positions held by 133,000 traders. Long traders, who bet on price increases, bore the brunt of the losses, with approximately $390 million being liquidated from their holdings. In contrast, short traders, with a more bearish outlook, saw liquidations worth $65 million during the same period.
Bitcoin traders faced the most substantial losses, totaling $163 million, with long traders losing $142 million and short traders $20.95 million. Ethereum followed closely with liquidations amounting to around $115 million. Remarkably, the most massive single liquidation occurred on OKX, involving an ETH-USDT transaction valued at $6.07 million.
Traders speculating on Solana and Dogecoin prices also suffered considerable liquidations, totaling approximately $17 million and $15 million, respectively. At the time of reporting, Bitcoin had made efforts to recover, trading around $57,500. However, low liquidity and significant short leverage continue to suppress the price.
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