Crypto markets have undergone their fastest correction in 4 months, with total capitalization shedding nearly 5% over the past day. The decline has sparked some trader concerns amid growing fears of a global economic slowdown weighing on risky assets in 2023.
According to analytics provider Santiment, buy-the-dip calls are high, indicating a degree of overeagerness and FOMO that often surfaces at local price bottoms.
Source: Santiment – Start using it today
Moreover, cascading margin liquidations have accelerated the downward spiral. Data from Coinglass shows $408.88 million worth of positions have been force-closed over the past 24 hours amid swelling volatility.
In particular, a sharp leg lower over the past 45 minutes has liquidated around $150 million worth of leveraged bets. This massive wave of liquidations likely placed significant selling pressure on already shaky markets.
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Ultimately, this week’s pending economic data and events may prove decisive for charting crypto’s next moves. But excessive leverage and eager dip-buying in the face of macro uncertainty could expose traders to further downside risk. Tighter risk management and prudent position sizing are warranted given the current conditions.
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