As the cryptocurrency market begins to recover, a surge in liquidations tells a different story. According to CoinGlass data, crypto liquidations have exceeded $271 million, the highest total for the week. This surge has impacted major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), as well as newer projects like NEIRO. This volatility highlights the ongoing unpredictability of the market, with Ethereum notably lagging behind Bitcoin and other leading assets.
Is the current situation with crypto assets in ‘Uptober’ a sign of a liquidity war? Will the market maintain its gains, or will it decline further? Let’s explore the possibilities.
Ethereum leads the liquidation trend, with $72.97 million wiped out. Long traders of ETH were hit the hardest when the expected price rise did not happen, causing losses as prices fell from $2,605 to $2,542. Long positions made up $56.58 million of the liquidations, while short traders lost $16.4 million. Bitcoin also faced significant liquidations, totaling $56.55 million, with long trades accounting for $28.62 million of that amount.
Other Cryptocurrencies Feel the Pinch
Other cryptocurrencies were not spared from the liquidation wave. Solana (SOL) experienced liquidations totaling $10.12 million, while NEIRO saw $6.49 million wiped out. Even meme coins like Shiba Inu (SHIB) faced minor losses, with liquidations below $1 million.
Despite the liquidation surge, there are signs of optimism within the Ethereum ecosystem. Ethereum’s gas fees have dropped significantly, making the network more usable, which could potentially boost transactions and drive a price increase. Additionally, Vitalik Buterin has introduced new developments for the network, such as The Verge, a system aimed at scaling the protocol through mobile phones.
It Won’t Be Easy…
However, challenges remain. Bitwise’s CIO, Matt Hougan, and data from IntoTheBlock suggest Ethereum may face further downside pressure due to strong resistance in the $2,545 to $2,621 range. With 3.2 million addresses having bought ETH in this price range, intense selling pressure could occur.
Additionally, analysts from CryptoQuant have noted a potential short squeeze, pointing to an increase in over-leveraged short trades on Ethereum. This situation could trigger a price spike, aiming for the $2,700 resistance level and potentially leading to more liquidations for short positions.
The cryptocurrency market remains unpredictable. While Ethereum faces notable challenges, there are signs that a price recovery might be on the horizon.
What do you think? Will Ethereum bounce back, or is the worst yet to come?
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