On June 11, Bitcoin‘s value dropped by 2.5%, descending from $69,547 to $66,018, while Ethereum saw a decline of 2.58% to $3,500. This downturn significantly impacted the futures market, leading to liquidations amounting to around $200 million.
Massive Liquidations Hit Market
Data from CoinGlass reveals that 83,912 traders experienced liquidations in the last 24 hours, totaling $190.97 million. The largest single liquidation order occurred on OKX involving an ETH/USDT swap worth $5.21 million. Liquidation happens when investors fail to meet their margin requirements, resulting in the exchange closing the leveraged positions and causing partial or full loss of the initial margin.
Bitcoin traders bore the brunt, losing $46.9 million in liquidations, with $36.8 million from long positions and $14.07 million from short ones. Ethereum traders faced the second-largest liquidations at $41.0 million, consisting of $31.3 million from long positions and $9.68 million from short trades.
These liquidations came shortly after the market saw $400 million in liquidations on June 7. The recent market correction following futures market liquidations is attributed to the anticipated May Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) release on June 12.
What to Expect in the Market?
Historically, CPI data releases and FOMC rate decisions have triggered volatility in the crypto market as investors reassess risk. Currently, the 30-day correlation between the crypto market and US stocks is at its highest since 2022. When CPI increases, Bitcoin and other crypto assets typically see price drops as investors have less disposable income to invest.
Key Takeaways for Investors
– Monitor upcoming CPI and FOMC announcements for market volatility.
– Understand that increased CPI can lead to lower investment in crypto due to reduced disposable income.
– Note the high correlation between crypto markets and US stock markets as an indicator for potential market movements.
– Prepare for potential rapid changes in market conditions following significant economic data releases.
Reports suggest that while the FOMC is likely to keep the benchmark lending rate within the 5.25%-5.50% range, CPI data is anticipated to remain between 0.1% and 0.3%.