The recent cryptocurrency market slowdown on January 7th has left many bullish traders decimated, particularly those with long positions. Recordings show a massive liquidation of over $630 million in the span of 24 hours. This downward trend carried over to January 8th, leading to an increased sense of uncertainty, though some investors perceive this as an opportunity to potentially increase their holdings at lower prices.
Cryptocurrency Market Turbulence
Referring to the data sourced from CoinGlass, $631.52 million was liquidated from long positions alone. This substantial amount accounts for the majority of all input lost in the last 24 hours, totalling up to $711.30 million.
In terms of individual traders, up to 237,701 traders saw their proprietary money disappear due to the liquidations, mostly from those involved in smaller-cap cryptocurrencies, otherwise known as “Others”. In one prominent case, an Ethereum (ETH) trader lost a staggering $17.41 million betting on the ETH/USDT pair on the Binance platform.
Impact on Low-Cap Cryptocurrencies
Regarding the “Others” group, a massive $171.12 million was lost due to liquidations. Following closely behind were ETH and Bitcoin (BTC) traders, who lost $152.32 million and $128.12 million, respectively. Long positions largely dominated within these categories, making up $163 million, $131.50 million, and $111.40 million of the liquidations, respectively.
This extraordinary loss can be linked to the recent popularity surge in small-cap AI-based meme coins. These had been experiencing a meteoric rise since the end of 2024, drawing in billions of dollars, as reported by Finbold.
The increasing fascination for such cryptocurrencies prompted major markets, including Binance, to list AI16Z, FARTCOIN, and ZEREBRO tokens for Futures trading. These AI cryptocurrencies are being bolstered by significant advancements in the artificial intelligence industry, which has spurred much financial excitement.
Bitcoin (BTC) Price Evaluation
Currently, Bitcoin’s price stands at $95,580, exhibiting a 5.65% decrease in the last 24 hours.
According to Robert Kiyosaki, a renowned finance author, this price drop is “great news” for Bitcoin investors. In his words: “Bitcoin crashing means Bitcoin is on sale, Buy low…and HODL”.
While these market crashes may cause panic for some, bullish investors, particularly those who buy and hold cryptocurrencies like Bitcoin, view this as an opportunity to increase their investments at lower prices. On the flip side, crypto traders who deal in derivatives, often with leverage, are typically victims of such high volatility events, leading to severe losses, as observed in the recent market crash.
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FAQs
Why did the cryptocurrency market crash recently?
This event was mostly due to high volatility and liquidation of long positions in the cryptocurrency market.
Are low-cap cryptocurrencies risky to invest in?
Low-cap cryptocurrencies typically carry more risks and are vulnerable to volatility.
What does ‘Buy low… and HODL’ mean in the context of cryptocurrencies?
This phrase suggests the strategy of buying cryptocurrencies when prices are low and holding them for the long-term regardless of market fluctuations.
What benefits does Finances Zippy provide for tracking cryptocurrencies?
Finances Zippy provides users with insightful market trends and potential price predictions to support informed investment decisions.
