Bitcoin(BTC) took a sharp tumble just a few days before the halving event, causing a 6% drop to $65,000 and triggering a broader 7.8% correction across the cryptocurrency market. Altcoins also saw significant corrections, with the top ten experiencing drops ranging from 8-15%.
The Bitcoin price dip led to around $1 billion in bullish crypto bets being liquidated in the past 24 hours, marking the most significant drop in a month, according to Coinglass data. This financial shake-up occurred amidst escalating geopolitical tensions, pushing investors towards traditional safe havens like bonds and the dollar.
The turbulence extended beyond the crypto market, with the S&P500 and gold prices retracing as well. This suggests that investors are grappling with CPI and inflation worries, with the chances of a Fed interest rate cut dwindling.
In derivative markets, there is growing uncertainty among traders, particularly ahead of a Bitcoin halving, which is historically seen as bullish. Implied volatility for Bitcoin options surged recently, indicating reduced confidence among market players regarding price direction. This uptick often prompts traders to pay more to hedge existing positions or speculate on potential price swings.
Bitcoin’s volatility spiked further amidst global financial market turmoil fueled by geopolitical risks. Implied volatility for near-term contracts soared from 59% to 71% in just two days, indicating a growing anticipation of short-term price swings.
The altcoin market also witnessed significant corrections, with Ether, Solana, Dogecoin, Cardano, and Polkadot all seeing substantial declines ranging from 12% to 15%.
As traders navigate the uncertain market conditions, they are possibly paying high premiums to buy downward protection. The growing anticipation of short-term price swings has led to increased volatility in both Bitcoin and altcoins.
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