After showing signs of recovery last week, the cryptocurrency market has been hit by another wave of sell-offs, with Bitcoin and Ethereum leading the downturn.
In the early hours of August 28, Bitcoin (BTC) saw a dramatic drop, falling from $62,000 to just $58,000 within the span of an hour. This sharp decline follows a strong rally last week, where BTC reached $65,000 for the first time since plummeting to $49,000 in early August. The rally was fueled by reports that the U.S. Federal Reserve (Fed) was considering reducing interest rates, alongside continuous inflows into Bitcoin ETFs.
However, the latest plunge has erased all of last week’s gains, adding pressure on other cryptocurrencies in the market.
Ethereum (ETH), the hardest-hit altcoin, has lost up to 10% of its value in the past 24 hours, briefly falling to $2,392 before recovering to $2,450 at the time of writing. Unlike BTC, ETH has been under scrutiny for less favorable reasons over the past week. Pessimistic remarks about DeFi from Vitalik Buterin and a $94 million ETH transfer to an exchange by the Ethereum Foundation have raised concerns. Additionally, the world’s leading smart contract network is facing a debate over its layer-2 strategy, which not only fragments liquidity but also reduces the value retained for ETH, leading to a decline in on-chain activity.
Other top altcoins have experienced 24-hour declines ranging from 5% to 13%.
In the last 12 hours, nearly $260 million in derivative positions have been liquidated, with 90% of these being long positions. The total open interest in Bitcoin derivatives contracts has also dropped by 10% following the recent downturn.
Notably, on Binance, a $12.6 million long position in the ETH/BTC pair was liquidated as Ethereum’s price dropped more significantly than Bitcoin’s.
One trader, after publicly revealing an $80 million long position on Bitcoin via Hyperliquid on social media, suffered a loss of over $4.4 million during this morning’s market crash, leading to speculation that this investor may have been "liquidated" by short-sellers, further driving BTC’s price down.
