By George Ward
The cryptocurrency market has been in unrest due to the sell-off situation around the FTX exchange. The occurrence has since reflected a surge in liquidation volume of up to $300 million in the last 24 hours. However, this has also been correlated to the sources leading to the cause of most liquidations.
Conventionally, a parabolic move in the market and a surge in liquidation volume result from the price action of Bitcoin in the market. However, the inference on Bitcoins market performance has been the narrative for quite a while but has now changed.
Notably, liquidation data reveals that the inauspicious occurrences related to the surge in liquidations in the market today are caused by FTT and ETH. This surge leaves many questioning the bull market trend since many investors depend primarily on technical analysis.
The FTX Effect On The Crypto Market
In its effort to curb the unprecedented surge in liquidation, FTX resorted to deploying its capital holdings which involved selling off a massive amount of Ethereum in their procession. Santiment’s data confirms that there’s been a steady increase in the selling pressure from ETH wallets owned by FTX.
FTX sold off 300,000 ETH from its possessions, leading to a surge in the selling price chart on Ethereum markets. Hence, investors had almost no choice but to absorb the swift change with no effect on the market price of the native token.
Furthermore, judging from the previous price action of Ethereum, the number of long positions held by traders on the market is observed to be the reason behind the unprecedented spike in liquidation volume.
Per multiple reports, traders actively open long positions despite the glaring issues tilting toward bear sessions. Nevertheless, liquidations on FTT are yet to occur due to FTX’s actions. So far, this lowered volatility due to huge retail selling pressure.
However, an FTX liquidation is a massive setback for the burgeoning crypto space. It also lends credence to regulators’ warning regarding the highly volatile nature of the crypto asset space.