Meanwhile, fears that the Federal Reserve will tighten monetary policy, have put investors and traders on their nerves.
Market structure caused the crypto crash
According to Analysts, the cryptocurrency crash was caused by the market’s structure. For instance, many traders use derivatives — contracts that allow traders to speculate on the direction of an asset without owning it.
After prices plunged on Friday, many exchanges “liquidated” the positions of traders to ensure that they can cover losses. In return, the liquidation caused further pressure on the market.
On Friday, more than $2 billion in long positions across the cryptocurrency market were liquidated. About $850 million of these were Bitcoin futures, according to Sean Farrell, head of digital asset strategy at Fundstrat.
Smaller cryptos such as Binance Coin, Cardano, and Solana were also affected by the price plummet at the weekend.
However, Farrell said that “there is reason to believe that bitcoin consolidates around its current level before heading higher,” given that traders are likely to be attracted by cheaper prices.
