Bitcoin plunged sharply on Tuesday after hitting its first all-time high in more than two years.
Data from the Bitpush terminal showed that BTC broke through $69,210 on Tuesday morning and then quickly fell back, falling below $60,000 during the session. As of press time, it rebounded to above $61,000.
Ethereum rose as much as 6.5% to $3,828.81 before erasing all gains and falling to $3,412.64. Other major altcoins such as ADA, DOGE and SHIB fell by about 10%-12%.
The market's sharp rise and fall resulted in nearly $1.2 billion in liquidations across the entire network.
According to CoinGlass data, 318,392 traders were liquidated in the past 24 hours, with a total of $1.19 billion. Among them, long positions were liquidated for $878 million and short positions were liquidated for $310 million. The largest single liquidation order occurred on the Bitmex platform, which was a LINK/USD trading pair worth $11.35 million.
Will adjustments continue?
Will Clemente, co-founder of Reflexivity Research, said on the X platform that Tuesday's blowup reminded him of Bitcoin's performance around Thanksgiving in 2020. At that time, bulls were eyeing a breakout of $20,000, but Bitcoin plummeted after hitting $19,500 and fell to around $16,000 in a short period of time.
“Any dip is to wash off the shackles of high leverage and buy at this point,” he said in the X post.
Some analysts warn that with unrealized profit margins approaching extreme levels, the market may soon cool down.
Ed Tolson, CEO and founder of cryptocurrency hedge fund Kbit, said in a post: “The market is expected to see a sharp correction, which may be between 10% and 20%. Any substantial decline will lead to cascading liquidations in the crypto perpetual swap market, with retail investors flocking to leveraged long positions and funding rates very high.”
He added: “Over the next few quarters, we expect Bitcoin to perform well, but with sharp corrections along the way.”
Oppenheimer analyst Owen Lau also said: "The rise has been so rapid that we are cautious about adjustments, but there are still catalysts to support positive price movements in the long run." He added: "As Bitcoin becomes more valuable, it becomes more useful. At a higher market capitalization and daily circulation, it can support a larger allocation. Bitcoin's volatility continues to decline over time, allowing for the allocation of larger position sizes."
Clara Medalie, director of research at crypto data provider Kaiko, echoed that sentiment, calling the new record “an important psychological milestone” and “a testament to crypto’s remarkable ability to bounce back and hold on despite facing significant resistance.”
Bull market cycle accelerates
Speculation is rife about Bitcoin’s future price action, with some analysts pondering whether the recent pre-halving spike has accelerated the usual market cycle.
Historical data shows that it traditionally takes Bitcoin about 500 days to reach a new all-time high after a halving. This deviation from the norm suggests that we may be entering a new era in Bitcoin price behavior.
The cryptocurrency community remains divided on the impact of the recent price correction and its implications for future market trends. Some analysts believe that Bitcoin may experience sideways fluctuations before continuing its upward trajectory.
At the same time, there is also some speculation that the potential impact of Bitcoin ETF spot inflows and other market factors is a key factor in determining the path forward for Bitcoin.
Since the launch of spot Bitcoin ETFs in January, institutions have begun to flock to the industry, and these ETFs have set record performances in the past six weeks of trading. As of the close of Tuesday, spot Bitcoin ETF trading volume once again set a new historical record of US$10 billion.
"Bitcoin has hit new all-time highs again, showing it's never going away," said Alex Thorn, head of research at Galaxy Digital. "In its 15 years of existence, Bitcoin has experienced four retracements of more than 75%, but has rebounded sharply each time."
