Crypto markets experienced significant volatility during morning U.S. trading, with Bitcoin’s price demonstrating sharp fluctuations. The cryptocurrency, initially hovering around $87,000, surged briefly to over $90,000 before retracting to approximately $87,300, marking a decline of 0.5% over the past 24 hours following a 3% increase just moments earlier.
This sudden price drop coincided with a broader downturn in technology stocks, particularly those associated with artificial intelligence. Major players in this sector, including Nvidia, Broadcom, and Oracle, saw their stock prices fall between 3% to 6%. Additionally, the tech-focused Nasdaq index declined by more than 1%.
The negative sentiment surrounding AI stocks was exacerbated by reports indicating that Blue Owl Capital had withdrawn support for a significant $10 billion investment in an Oracle data center initiative in Michigan. This withdrawal raised concerns about the stability and future of investments in AI technologies.
The rapid price swings in the cryptocurrency market resulted in over $190 million in liquidations within crypto derivatives markets over a four-hour period, as per data from CoinGlass. This liquidation included $72 million in long positions, which were betting on price increases, and $121 million in short positions that anticipated a decline.
The underlying issue affecting Bitcoin’s price stability has been identified as shrinking liquidity. According to Hunter Rogers, co-founder of the bitcoin yield protocol TeraHash, this reduced liquidity contributes to Bitcoin’s erratic trading patterns, making it susceptible to external pressures. Rogers observed, “I think we’re now seeing an exhausted market. In that environment, even mild selling activity pushes the market lower.”
Rogers emphasized the importance of maintaining a support level between $80,000 and $85,000 for Bitcoin. He suggested that the ability to hold this range could determine whether the market will experience further declines or potentially a more sustainable recovery in the near future.
