The total market cap of cryptocurrencies in the world stands at $2.6 trillion after a 5.85% decline, but market trading volume rose by $197.23 billion after a 43.85% rise. Many cryptocurrencies have lost value accumulating over weeks, including Bitcoin. It fell from an ATH value of $73,750.07 to $67,007.19 after an 8.7% decline. So, what's happening in the market? Let's discuss it in this blog.
The most important reasons behind the decline in the cryptocurrency market
The cryptocurrency market has to deal with sudden bear attacks, even in bullish situations. Most cryptocurrencies have shown a similar factor in facing the decline since yesterday. Leading crypto investors and analysts are skeptical about taking a step back before targeting a rally. There were three main reasons for the market crash: liquidation issues, market correction, and panic selling.
Filter issues
Coinglass data revealed significant liquidation issues for cryptocurrencies such as Bitcoin, Ethereum, and Solana. So far, Bitcoin's uptrend has helped altcoins perform, but given its decline from the $70,000 range, altcoins appear to be following suit as well. Over $666 million worth of cryptocurrencies have been liquidated in the market. Of them, long-term traders are responsible for $531 million.
Speaking of Bitcoin, the liquidation amounted to $246.66 million, of which $195.61 million were long positions, and the remaining $47.05 were short positions.
The Ethereum Dencun upgrade led to a price liquidation of the coin, with the total liquidation reaching $116.07 million. $94.86 million is allocated to long-term investors, while $21.21 million is allocated to short-term traders.
Crypto market arbitrage
After years of low profits, cryptocurrencies are finally making a comeback with Bitcoin, memecoins, and the rest of the altcoins performing exceptionally well. Ethereum price rose above the 4K mark earlier but fell to $3,678.58. It's the same with many other cryptocurrencies at the moment. After a successful day in the market, a slight decline is very common, which is called market equilibrium.
Read also: Ethereum Dencun Upgrade: Everything you need to know
Analysts like Captain Vibeke predicted a market correction before the Bitcoin halving occurred. He predicted that Bitcoin price would fall to $60,000 before rising to target another ATH value.
Panic selling
Since the market is at its best point in three years, investors do not want to miss out on the best value. Many altcoins have reached the ATH value in just the last few days, and from that, prices may have fluctuated here and there, causing panic selling. People don't want to miss out on their best price now rather than putting a sale on hold for several months to make a profit. Panic selling occurs when investors start selling their tokens for fear that the market will crash or fall. This selling sequence eventually ends with lower prices.
The market is not completely down and could come back soon. It is an opportunity for short-term traders to make the most of this market.
Conclusion
The cryptocurrency market has many volatility factors where price rises and falls can occur at any time, which can be managed to take maximum profit and minimum loss through technical analysis. Besides, proper knowledge of the cryptocurrency market can help. As of now, many cryptocurrencies have faced a decline from their previously high value, but it may be a slight decline. There are chances that these cryptocurrencies can make a comeback soon.
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