Crypto markets continued to swoon in mid-morning trading New York time Wednesday, with top DeFi names such Ethereum and Solana skidding more than 8% in the last 24 hours.
The sudden slide this week caught investors by surprise after a glorious run in August saw Bitcoin and ETH reclaiming much of the ground they lost in the May bear market. Bitcoin was trading at $46,513, down 9% in the last 24 hours, this morning, and ETH was bouncing around $3,425, according to data from CoinGecko.
After a buoyant summer for crypto markets, futures funding rates show that traders continued to press their bullish bets, resulting in a cascade of liquidations triggered by a bout of profit-taking.
Leveraged Longs Liquidated
According to bybt, nearly $4B in leveraged positions were liquidated in the past 24 hours.
Futures funding rates on centralized exchanges had been rising rapidly over the past week, implying that traders were piling on the leveraged bets. This led some to urge caution, as the previous peaks in funding rates have tended to precede price drops.
For the moment, traders don’t seem too concerned, with FTX chief Sam Bankman-Fried tweeting that the sell-off seemed “decently orderly as far as large moves go”.
TRON network founder Justin Sun proclaimed that he was “buying the dip”.
Beware The Ides Of September
Is today’s sell-off simply a purge of excessive leverage or the beginning of a larger downtrend?
While correlation doesn’t imply causation, it may be worth noting that September has historically been the worst month for stock markets and risk assets in general. The so-called “September Effect” is well known among equity investors.
So, as we wait for up-only to resume, stay safe out there! Also, just to keep things in perspective, ETH is up a tidy 873% over the last 12 months, and Solana is soared more than 5,000% in that period.