Over the past 24 hours, $400 million worth of crypto long positions have been liquidated in the derivatives market. This pain comes after the entire crypto market turned red on the night of Sunday to Monday, with Ethereum in particular taking a hard hit.
‘Buy the rumour, sell the news’
It is now clear that the Ethereum Merge was a so-called ‘buy the rumor, sell the news’ event. This is something we often see in the crypto world. In the run-up to a major event or protocol upgrade, the value of a token increases. The hype builds and we see that reflected in the price. Then a sell-off occurs the moment the event or upgrade actually takes place.
On Thursday, Ethereum was still trading at a price of $1,600, but little is left of that now. After a few heavy corrections, the Ethereum rate is currently at $1,292. That means that the project has to write a minus of 25.85 percent for the past seven days. We can say that Ethereum is currently in free fall and we can hope that the bottom is reached soon.
Towards a new bottom?
It seems that the market is heading for a new bottom. On the macroeconomic front, little has changed and it looks like we are in for some tough months. This combination of factors means that there is currently little money on the sidelines ready to flow in. It should therefore come as no surprise that ‘extreme fear’ is back in the market.