Bitcoin faces price drop, while altcoins fall 10-15% in a rough day for risky assets.

The Bitcoin price experiences a significant sell-off as today’s downward movement results in the liquidation of numerous BTC and altcoin traders who were caught off guard. Although the decline began early on Friday, it intensified around noon ET, transforming small losses into double-digit declines for numerous cryptocurrencies 

The price of Bitcoin saw a sudden downturn of 5% on the 12th of April as traders that were having leveraged positions in Bitcoin and other cryptocurrencies incurred losses of more than $400 million in just under an hour. The price of Bitcoin dropped from $68,341 to as low as $65,110 in just under an hour, which is a loss of more than 5%. This downturn in the price happened in late New York session trading hours on April 12. 

Ethereum on the other hand, which is the second largest cryptocurrency by market capitalization, fell from an opening of $3,553 to trade at $3,226, which is a loss of more than 8%. 

According to Coinglass futures market data, Bitcoin’s sudden drop led to the elimination of over $417 million in leveraged positions in just one hour. The majority of this sum, including over $77.93 million in Bitcoin longs and more than $63.35 million in Ether longs, contributed to the significant losses. Longs are derivative contracts that allow investors to bet that the price of an asset is going up. If a long is liquidated, then the trader has lost the bet, and their position is closed.  

It was also revealed by Coinglass that within the span of the past 24 hours, total liquidations reached $860 million among 270,993 traders. The most amount of long and short liquidations took place on Binance, adding up to $171 million, while the traders that use the crypto exchange OKx incurred combined losses of more than $158 million. 

The crash happened as U.S. stock markets declined during the U.S. trading session, following new data indicating that inflation had increased for the third consecutive month. 

Jamie Dimon, the CEO of JP Morgan, warned on April 12th that “persistent” inflation, geopolitical tensions and the Fed’s Quantitative tightening efforts threaten an otherwise positive economic outlook. 

Solana, the fifth biggest cryptocurrency, also nosedived by nearly 7% and Toncoin, which had been performing strongly this week, and which also flipped dogecoin in the process, is now priced at $6.65, which is a loss of 7%. 

This week there hasn’t been much good news for cryptocurrencies in general. The unexpected rise in inflation reported earlier this week led to a surge in interest rates and a decline in tech and growth stocks, which have all traditionally correlated with a fall in the values of cryptocurrencies. 

The U.S. Securities and Exchange Commission (SEC) also has issued a Wells notice to Uniswap, signaling a potential legal action against the cryptocurrency. The market has been struggling to gain clarity on legal boundaries, especially as the SEC has pursued legal actions against prominent entities such as XRP and Coinbase. However, the SEC has largely faced defeats in these cases, leaving uncertainty regarding the outcomes of the latest legal battles. 

Since there is a lack of clarity in the regulation, it’s not much of a surprise that the investors have decided to take profits at the market peak. 

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