With the downward movement of cryptoassets, $1 billion in leverage has been unwound ─ Analysts point out a healthy pullback | CoinDesk JAPAN

• The downward movement of Bitcoin from its all-time high to 118,000 Dollar has impacted the cryptoassets market, triggering over 1 billion Dollar in liquidations across digital assets.
• Analysts stated that the expectation of a rate cut by the FRB and the inflow into ETFs are still supporting a bullish momentum, indicating that this sell-off is a healthy profit-taking rather than a reversal.
• The rise in core inflation indicators and elevated valuations are short-term risk factors, but demand for cryptoassets from institutional investors remains strong.

The CoinDesk 20 Index (CD20), composed of major cryptoassets, has seen a downward movement of 2.1% in the past 24 hours. Bitcoin (BTC) fell by 2.3%, while XRP dropped by 4.6%, but Ethereum (ETH) only experienced a slight downward movement of 0.7%, showing relative resilience.

David Siemer, co-founder and CEO of Wave Digital Assets, stated, “In my view, this downward movement is merely a correction in a bullish trend,” and added, “Bitcoin has firmly established itself as the foundation of institutional investors’ cryptoassets strategies.”

The surge of Bitcoin to a record high of 124,000 Dollar (approximately 17.98 million yen, based on an exchange rate of 145 yen per Dollar) was fueled by growing expectations that the Federal Reserve (FRB) would cut interest rates in September, as well as increased inflows into ETFs (exchange-traded funds) and adoption by institutional investors.

Mr. Seamer pointed out that the decline to 118,000 Dollar on the 14th was “similarly a normal phenomenon.”

Mr. Seema pointed out that “after such a sharp rise, there tends to be a movement for profit-taking, and short-term traders have been seen liquidating their positions to secure profits.” He also stated, “Additionally, especially regarding the core CPI, the optimistic outlook of the Fed, which was driven by inflation indicators exceeding expectations, has somewhat weakened.”

Mr. Seema concluded that “this is more of a healthy consolidation rather than a reversal.”

Joel Kruger, a market strategist at LMAX Group, also expressed a similar view.

Mr. Kruger stated in a morning memo, “Given the remarkable movements in the cryptoassets market this week, it is not surprising that a series of profit-taking has begun.” He pointed out, “However, the overall outlook remains very positive, and the downward movement should be well supported.”

Mr. Kruger pointed out that the main risks for cryptoasset prices going forward are the possibility of overvaluation, geopolitical turmoil, and economic data that could lead to a reassessment of the Federal Reserve’s outlook.

Nevertheless, latecomers in the bullish camp suffered painful consequences due to the frenzy. This shakeout triggered a large-scale unwinding of leverage, and according to CoinGlass data, over 1 billion dollars (approximately 145 billion yen) in leveraged positions were liquidated across all cryptoasset derivative trading in the past 24 hours. Most of these were long positions betting on price increases.

[Liquidation of cryptoassets (CoinGlass)] The liquidation of this long position has been the largest since the downward movement from late July to early August. At that time, Bitcoin fell below 112,000 Dollar, and many altcoins recorded double-digit downward movements. Ultimately, it formed a local bottom in most of the digital asset market.

Trader Bob Loukas, who has many followers, stated in a post on X, “It may not have been the best idea to hold a 50x long position after a 50% increase in 7 days, as this kind of shakeout occurs here.”

| Translation & Editing: Rina Hayashi | Image: Dimitris Vetsikas/Pixabay ｜Original: Crypto Slide Spurs $1B Leverage Flush, But It’s a Healthy Pullback, Analysts Say