A crypto flash crash resumed today, Aug. 25, erasing some of the gains made during the weekend after Jerome Powell delivered a dovish statement at the Jackson Hole Symposium on Friday.

Bitcoin (BTC) price dropped to $111,400, down from the weekend high of $117,000, while Ethereum (ETH) fell to $4,640, a day after it neared the crucial resistance level at $5,000. 

The market capitalization of all tokens dropped by 2.9% to $3.86 trillion, down from the year-to-date high of over $4.1 trillion.

Crypto flash crash triggered by surging liquidations

One potential reason for the ongoing crypto crash is the surging liquidations. CoinGlass data shows that liquidations surged by 390% to $845 million, resulting in the liquidation of 166,000 traders.

Ethereum bulls suffered most of the liquidations in the last 24 hours to $304 million, while Bitcoin’s surged to over $272 million. The other top liquidations were Dogecoin (DOGE), Solana (SOL), and Chainlink (LINK).

Liquidations happen when crypto exchanges are forced to close leveraged trades to prevent more losses. A substantial liquidation of bullish trades normally leads to more selling pressure.

At the same time, the derivatives market data shows that futures open interest jumped by 11.74% to over $1 trillion, while the weighted funding rate rose by 17%, triggering a long squeeze.

The crypto flash crash is also occurring due to profit-taking following the recent surge.

Potential dead-cat bounce

The other potential reason why the crypto market crash is happening is that the recent surge was a dead-cat bounce or DCB. A DCB

Go to Source to See Full Article
Author: Crispus Nyaga