29.12.202116:30 Forex Analysis & Reviews: Bitcoin's plunge makes losses of $90 million

Bitcoin failed to overcome the level of $52,000 and quickly returned to the area of $49,000, while ether also dropped after another failed attempt to break $4,140. The technical picture will be discussed below.

Notably, bitcoin's dominance continues to weaken rapidly lately. Alternative coins are gaining momentum. Many cryptocurrencies, apart from some largest ones, have shown exponential growth this year as the crypto-economy has demonstrated quite a large expansion, sparking interest of many investors. Coins such as Dogecoin, Cardano and Shiba Inu, previously considered as speculative, have become extremely popular this year. Solana and Polkadot, the future Web3, can be added to this group. It was severely criticized by Zuckerberg and Musk recently.

Many experts note that despite the fact that bitcoin is rapidly progressing this year, smaller tokens and coins confidently gain market capitalization. This fact is another proof of high interest in the cryptocurrency markets and its formation.

The new fast-growing dynamics of smaller cryptocurrencies has reduced bitcoin's dominance. According to the report by CryptoCompare, total assets under management of bitcoin-related investment products fell by 20% to $39 billion in December. Bitcoin products' share of total digital asset investments decreased to 67.8% from 70.6%, a low of the year'.

As mentioned above, such coins as Polkadot and Cardano are leading the way, and went up more than 20% in just one week. Axie Infinity Coin added 18% during that period.

Losses in futures market

As for yesterday's sell-off in the bitcoin spot market, it led to the liquidation of almost 80% of long positions in the futures market, with losses amounting to $90 million. The fall in cryptocurrency markets yesterday caused almost $300 million of futures to be liquidated. More than 109,000 traders' positions were liquidated in the last 24 hours, mostly long margin positions.

Notably, liquidation occurs when an exchange forcibly closes a leveraged trader's position as a safety mechanism due to a partial or complete loss of the trader's initial margin. As mentioned above, almost 80% of the $300 million accounted for long positions, that is, those held by traders betting on rising prices.

As for ether, the positions equivalent to more than $57 million were liquidated. Altcoins such as Solana and Cardano also suffered losses.

Technical picture of bitcoin

The picture has been completely changed as the trading instrument has formed a new sideways channel with the prospect of further growth. The support at $48,460 is highly significant. If bears break it in the near future, bitcoin rate will most likely decline to the area of $45,660. In case of its breakout, it's better to expect renewal of levels of $41,600 and $37,380. It is possible to discuss the first cryptocurrency further growth only after the exit beyond the new resistance of $51,800. Its breakout will give a chance to reach $55,120 and $58,776.

Technical picture of ether

Buyers of ether risk losing major support at $3,912, which currently keeps the market balanced after yesterday's sell-off. This level is the middle of a sideways channel, creating preconditions for further growth of the trading instrument. In the near future, the return of ETH to the area of $4,140 is possible. A breakout of this range will give a chance to reach the highs of $4,404 and $4,647. If the pressure on ether returns, it is best to focus and gain long positions near support at $3,680. Its breakout is a warning sign for buyers at the end of this year.