By Francisco Rodrigues (All times ET unless indicated otherwise)
Bitcoin (BTC) slipped below $105,000, wiping out all of its early-week gains, as mounting concerns over credit market stress and a wave of forced liquidations hit crypto markets.
Over $1.2 billion in leveraged crypto positions were liquidated in the past 24 hours, according to CoinGlass data, as the broader crypto market dropped by 8.89% based on the CoinDesk 20 (CD20) index.
The timing coincides with a broader wave of credit-related anxiety in traditional markets. The recent bankruptcies of First Brands and Tricolor have raised fresh questions about the health of corporate debt markets and drove down the prices of risk assets across the board.
JPMorgan CEO Jamie Dimon warned that these events may be early signs of deeper credit excess, telling investors, “When you see one cockroach, there are probably more. Everyone should be forewarned on this one.”
That uncertainty spilled over into crypto markets as leveraged traders scrambled to cover positions. Nearly 79% of liquidated trades were longs, reflecting misplaced optimism about a rebound.
Bitcoin is holding up better than altcoins, many of which posted double-digit losses. That’s not surprising according to Thomas Chen, CEO of Function and former TradFi executive.
“If we’re again in a highly levered situation with altcoins, and Bitcoin drops 10%, alts can easily go down 40-50% if the interest remains weak, and it’s game over,” Chen told CoinDesk in an emailed statement. “It’s the “altcoin” bucket that gets dumped first under low market confidence conditions. Indeed, we’ve seen this happen many times.
The macro backdrop isn’t helping. Fears of a prolonged US-China trade spat, regional bank fragility, and weakening confidence in long-dated sovereign bonds are rattling markets, even with the Fed cutting interest rates now being a near certainty.
That fear has pushed gold toward $4,400 and 10-year Treasury yields below 4%. Gold-backed tokens like XAUT and PAXG have benefited from the precious metal’s rise and keep outperforming the wider market.
“It’s worth bringing up that markets often overreact and then correct themselves,” Chen added.
What to Watch
For a more comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead”.
