Bitcoin and most altcoins crashed this week, mirroring the performance of the stock market, and leading to over $1 billion worth of liquidations. BTC plunged to a low of $84,000, while coins like Solana, Cardano, Sonic, Ethena, and Dogwifhat. So, is it safe to buy the ongoing dip?
Crypto crash liquidations jump
The ongoing crypto slump has triggered a wave of liquidations. These liquidations were notable since they happened as most crypto investors were restarting their buying spree after Donald Trump unveiled his strategic crypto reserves plans.
They also bought these coins after Donald Trump announced that he would have the first crypto summit at the White House. This summit will have senior executives in the crypto industry, including from popular companies like Coinbase, Ondo Finance, and Gemini.
Most crypto prices crashed, leading to substantial liquidations. Bitcoin’s liquidations soared to over $400 million in the last 24 hours. Ethereum liquidations surged to over $212 million, while Solana, Cardano, and XRP’s liquidations jumped to over $71 million, $44 million, and $63 million, respectively.
Most of the liquidations happened in popular exchanges like Bybit, Binance, OKX, Gate.io. Liquidations happen when exchanges are forced to close long or short positions when the trade goes in the opposite direction.
Over 314,000 traders were liquidated in the past 24 hours. The biggest of this was a Bitfinex trader whose $13 million position was liquidated.
Why Bitcoin and other crypto prices crashed
Despite the good news in the crypto industry, there are three main reasons why Bitcoin and other crypto prices crashed this week.
First, the crash is because of the ongoing trade tensions in the United States, where tariffs on imports started. Trump has implemented a 25% tariff on goods from countries like Canada and Mexico that account for a third of all products shipped to the country.
These tariffs will have major implications, including affecting growth and boosting inflation in the country. Altogether, they will lead to more volatility in the market and put the Federal Reserve between the rock and a hard place.
These fears explain why American stocks also plunged on Monday, having their worst day this year. The Dow Jones plunged by 650, while the S&P 500 and Nasdaq 100 indices fell by 100 and 500 points, respectively.
Further, the VIX index jumped to 22, while the crypto and stock-focused fear and greed index dropped to the fear zone.
Historically, cryptocurrency prices often crash when there is a sense of fear in the market as this pushes many investors to the sidelines.
Is it safe to buy the Bitcoin and altcoin dip?
There are a few reasons why it may make sense to buy the crypto dip this year. First, Donald Trump watches the stock market closely and uses its performance to gauge his approval in the US. Therefore, plunging stock prices mean that he will be forced to intervene in the coming days.
Second, the tariffs were expected since he announced them in January. As such, there is a likelihood that stocks will eventually bounce back as investors buy the fact. Most investors had already priced in these measures.
Third, there is a likelihood that courts will stop tariffs on Canadian and Mexican goods since they interfere with the USMCA policy that was voted by Congress and signed into law by Trump. As such, there is an argument on whether he can unilaterally cancel the deal.
Further, with tariffs now into effect and threatening to push the US into a recession, the next phase will be how to end them. Trump often does a big thing and then moves into negotiations.
Therefore, there is a likelihood that US stock indices like the S&P 500 and Dow Jones will rebound and pull cryptocurrencies upward, too.
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