- Bitcoin’s free fall below $60k saw fear grip the market
- Memecoin market has fallen out of favor lately, but one candidate seemed to pique investor interest
The last 36 hours have seen Bitcoin’s [BTC] price fall by 9% from $58.8k to $55.5k, before bouncing by 6% to touch $56.8k at press time. This volatility led to a large number of crypto liquidations, with the long positions experiencing more pain.
Bitcoin’s price drop was caused by various factors. One of these factors was the news that the German government is selling BTC. Another was Mt. Gox transferring $2.7 billion worth of BTC to a new address.
Following the scale of this volatility, crypto liquidations will likely ease up over the next few days as the market needs time to build up liquidity, before moving towards it to take it out.
The memecoin sector wasn’t unaffected by all this either. While it was one of the best gainers in late May, it has turned bearish in recent weeks.
Bloodbath has stalled for now
Source: Coinglass
As per Coinglass data, between 4 and 5 July, a combined total of $750.55 million in long positions and $198.66 million in short positions were liquidated. Here, liquidation refers to a trader’s position in the Futures market being forcibly closed when their account margin is no longer sufficient to maintain their open positions.
In turn, when they are closed, they introduce market orders in the opposite direction of the open position before liquidation. Therefore, the effect of a quick flurry of long liquidations due to swift price drops leads to a liquidation cascade.
Large crypto liquidations in this manner can be beneficial for the market. It can wipe out over-leveraged traders, paving the way for a spot-driven price move, and reducing the effect of speculation.
Pepe [PEPE], the third-largest memecoin by market capitalization, might be set to benefit from the recent wave of selling.
State of major memecoins is poor, with one exception
Source: Hyblock
AMBCrypto found that PEPE’s liquidation heatmap saw a huge chunk of liquidation levels in the $0.000077-$0.0000095 region wiped. This has been building up since mid-May. To the north, the $0.000014 zone could be the next magnetic zone for the altcoin’s price.
AMBCrypto’s analysis of Dogecoin [DOGE] and Shiba Inu [SHIB] revealed that the two memecoins have a cluster of liquidation levels further south.
Therefore, a recovery for DOGE or SHIB might take more time and a deeper correction. Even though Shiba Inu exhibited a bullish flag on the higher timeframes, it is PEPE that might recover the quickest from its recent losses.
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Source: PEPE/USDT on TradingView
PEPE bulls must defend the $0.00000796-$0.0000089 territory to keep the higher timeframe bullish hopes alive. The recent crypto liquidations have incited panic in the market, but there is some hope that July might see a price recovery initiated.
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