The crypto market suddenly turned red on March 10 in the year’s worst sell-off. Bitcoin slipped below $20,000 for the first time in three months, and the market sentiments are bearish. The aftermath of the crash has leveraged traders reeling with millions of dollars in active trading positions liquidated during this period. 

According to data from CoinGlass, derivative traders have lost about $202 million in the past 24 hours. Leveraged trading or futures market is when traders speculate using derivatives or loans from the exchange. 

In this type of market, traders can either go long (speculate a rise in the coin) or go short (speculate a dip in the price). When the price reaches a certain level contrary to the trading position, the trade is liquidated and the trader loses his capital. 

CoinGlass data further shows that BTC has the largest liquidation volumes of more than $60 million, with Ethereum coming a close second with $52 million. This is unsurprising as they are the two most traded tokens in the crypto market. 

Related Reading: The Time to Sell Bitcoin (BTC) Is Now, Says Peter Schiff

The liquidation numbers are the highest recorded since mid-January. On that occasion, the bearish movement of the market saw more than $490 million liquidated in a single day across different exchanges. 

The steep price dip affecting the crypto market has been coming following developments recently. Crypto bank Silvergate had reported on March 9, 2023, that it would shut down operations. This came less than a week after Silvergate Capital Corporation had indicated that it was evaluating whether it would continue operating this year and closed its crypto payment network.

These negative sentiments continued with news that New York Attorney General Letitia James has formally sued crypto exchange Kucoin. According to the suit, Kucoin offered, sold, and bought securities without necessary registration. It also alleges that ETH, the native token of the Ethereum blockchain, is a security. According to James, ETH falls under the definition of securities as they represent the investment of money in common enterprises, with profits derived mainly from the effort of others. 

Related Reading: Silvergate To Close Bank And Wind Down Operations

The prosecutor alleges that Kucoin, one of the oldest exchanges, is engaged in the business of selling and offering to sell commodities through accounts, agreements, or contracts to New York accounts primarily for investment purposes.

Beyond just crypto, some external factors have affected the market with recent forecasts from the US Federal Reserve. Jerome Powell, chair of the Fed, declared before the US Senate Banking Committee that the economic perspectives were not as expected in this quarter. 

The inflation forecast is expected to lead to higher interest rates than expected during the next Fed meeting scheduled for March 22. 

Bitcoin has recovered slightly from its dip and is currently trading for $20,126 at the time of writing. 

Featured image from Unsplash, Charts from Coinglass.com and Tradingview.com

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