Here’s Why Bitcoin And The Crypto Market Crashed This Weekend – The Details

Bitcoin and the cryptocurrency market in general have continued their struggles, as prices took a nosedive this weekend. On Friday, January 31, it appeared that the crypto market was preparing for another slow weekend as prices recovered slightly after Thursday’s bloodbath.

However, the market went completely against the trend this weekend, as Bitcoin and other major digital assets fell by almost double digits on Saturday. Here’s a look at the factors behind this massive drop and a quick overview of crypto prices.

Why Bitcoin and Crypto Prices Dropped This Weekend

Following Bitcoin’s initial decline to $81,000, various reasons, ranging from the country’s turmoil to the FOMC’s decision to keep interest rates unchanged, circulated. However, the continued decline in prices, even on a lazy weekend, suggests that other factors are at work.

In a new post on social media platform X, the prominent financial market analyst Kobeissi Letter pondered the possible reasons for the decline in the markets in recent days. According to the report, looking at the crypto flow data will shed more light on this market debate.

According to The Kobeissi Letter, the recent price drop witnessed by the world’s largest cryptocurrency by market capitalization is purely a liquidity situation. As shown in the highlighted chart, Bitcoin has seen three well-defined waves of liquidation, culminating in over $1.3 billion in the past day.

Source: @KobeissiLetter on X

The financial market analyst also pointed out that the crypto market has been very negative recently. However, the continued extreme growth rates in the Bitcoin market have resulted in the formation of “air pockets” in the price.

The Kobeissi Letter adds:

Combine this with a herd-like temperament, constantly shifting from extreme heat to extreme heat, and the transition becomes even more violent.

Unsurprisingly, the market-wide price correction saw the market hit by one of the largest liquidation events in crypto history. Market data shows that about $2.5 billion of leveraged longs have been removed from the digital asset market in the past 24 hours, the 10th largest crypto liquidation event.

Most notably, more than $1 billion of identified long positions were forcibly closed within 5 minutes, as the price of Bitcoin fell to around $76,000 on Saturday.

Crypto Market Capitalization Up 7%

As of this writing, the total cryptocurrency market capitalization stands at about $2.725 trillion, which represents a dip of about 7% in the last 24 hours.

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

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