Crypto markets suffered major whipsaw action in morning trading in the US with bitcoin in a matter of minutes, from around $87,000 to over $90,000 and then back to the $87,000 range.
The largest crypto recently traded at $87,300, down 0.5% over the past 24 hours after being higher by more than 3% minutes earlier.
The rapid decline came alongside heavy losses for artificial intelligence-related stocks, with Nvidia, Broadcom and Oracle suffering 3%-6% declines. The tech-centric Nasdaq was lower by more than 1%.
To help dampen AI sentiment, Blue Owl Capital was reported to have pulled out of financing a $10 billion deal for an Oracle data center in Michigan.
The sudden price swings triggered over $190 million in liquidations across crypto derivatives markets in the past four hours, CoinGlass data shows. The volatile action hit $72 million in long positions trying to take advantage of rising prices and $121 million in shorts betting on a decline.
Shrinking liquidity at the margin is the main culprit behind bitcoin’s directionless trading, making it vulnerable to any outside pressure, Hunter Rogers, co-founder of bitcoin returns protocol TeraHash, said in a note.
“I think we’re now seeing an exhausted market,” he said. “In that environment, even mild selling activity pushes the market lower.”
He added that BTC needs to hold the $80,000-$85,000 area as support, which could determine whether fresh lows or a more sustainable rally comes next.
