WHY DOES THE MARKET DUMP AND WIPE ALMOST $2 BILLION TRADES IN JUST 24 HOURS?
HERE'S WHAT HAPPENED:
1. COINBASE TRADERS STARTED THE SELL-OFF.
COINBASE TRADERS BEGAN SELLING 1 HOUR BEFORE THE MAJOR DUMP. THE SELL PRESSURE PUSHED THE LIQUIDATION LIKE A DOMINO.
2. LIQUIDATION CASCADE TRIGGERED THE BIGGEST DROP.
ONCE THE MARKET HIT A KEY LIQUIDATION ZONE, IT WAS GAME OVER.
- OVERLEVERAGED POSITIONS STARTED TO CLOSE.
- STOP-LOSSES WERE TRIGGERED, CREATING A CHAIN REACTION.
3. THE MARKET WAS OVERHEATED
- FUNDING FEES WERE SPIKING (A SIGN OF EXCESSIVE LONGS).
- OPEN INTEREST WAS RISING RAPIDLY (TOO MANY TRADERS PILING IN).
THEN SOMETHING INTERESTING HAPPENED...
1. STRONG BUYING PRESSURE EMERGED ON ETH
ETH DOESN'T EXPERIENCE MUCH DRAWDOWN COMPARED TO BTC.
THE VOLUME IS THERE TOO.
2. UNUSUAL SELL-OFF IN XRP
THE XRP’S LOW LIQUIDITY MADE THE MOVE WORSE. XRP MAY HAVE A LARGE MARKET CAP, BUT ITS LIQUIDITY IS STILL THIN. THIS IS WHY XRP CAN SURGE HUNDREDS OF % OR CRASH OUT OF NOWHERE.
3. MASSIVE VOLUME IN ADA, USDC & FDUSD
WHEN THE DUMP STARTED, THESE THREE SAW INSANE VOLUME.
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AFTER A LIQUIDATION LIKE THIS, HERE’S WHAT USUALLY HAPPENS:
- LIQUIDATIONS WIPE OUT WEAK HANDS.
- SMART MONEY BUYS THE DIP AT A DISCOUNT.
- THE PRICE SNAPS BACK QUICKLY.
THE DUMP CLEARS OUT WEAK POSITIONS, AND THE STRONG HANDS STEP IN.
