The world’s largest cryptocurrency fell by as much as 14% to $61,000 after reaching a peak of $69,191. More than 800 million positions were liquidated in the futures market as the price of Bitcoin reversed, according to data from Coinglass.
This sharp volatility is the latest evidence of Bitcoin’s “unpredictability”. The world’s largest cryptocurrency has risen more than 60% since the beginning of 2024, as investors were excited about the SEC approving Bitcoin ETFs. In past cycles, the price of Bitcoin often increased by over 1,000% but then declined 3/4 of its value in the following years.
“We always see a significant number of positions being closed when the price hits a record high,” said Ayesha Kiani, the Director of Operations at MNNC Group, a virtual currency hedge fund. “Market adjustments were already anticipated.”
Most of the recent uptrend came from bets on upward momentum in the derivatives market. Investors in this market can use leverage of up to 100 times their position.
The total value of Bitcoin futures contracts has reached a record high of over $30 billion, according to Coinglass.
“Traders should be cautious with leverage in the current market,” said Vetle Lunde, a senior analyst at K33 Research. “Even if you predict the trend correctly, large volatility combined with high leverage can wipe out your account.”
According to Shiliang Tang, Chairman of Arbelos Markets, when Bitcoin sets a new record high, investors start to shift to smaller cryptocurrencies such as Ethereum and Solana.
Some investors believe that Bitcoin will continue to reach new highs in the long run, mainly due to the expectation that Bitcoin ETFs will continue to attract strong capital. The 9 Bitcoin ETFs launched this year have attracted a net inflow of $8 billion.
Each time Bitcoin sets a new record high, the price could multiply by 4-5 times in the future, according to Leo Mizuhara, the founder and CEO of Hashnote. However, this time, Bitcoin may only double its current price. Based on this assumption, he predicts that Bitcoin could reach $138,000.
“Setting a new record high is evidence that Bitcoin has truly made a strong comeback,” shared Michael Safai, the co-founder of Dexterity Capital.
