A notice on the U.S. Justice Department’s website about an oncoming crypto-related effort resulted in a steep sell-off on Wednesday, causing bitcoin (BTC) and ether (ETH) to dip under newly breached support levels before slightly recovering.
The U.S. Justice Department announced a major international cryptocurrency enforcement action at noon ET on Wednesday. That turned out to be a money laundering charge against Bitzlato, a little-known crypto exchange that is said to have illegally conducted $700 million in direct and indirect transfers in the last several years.
The time between the initial announcement and the actual news ended up being a hotbed for doomsayers.
Such sentiment was enough to trigger the steep fall. Bitcoin quickly tumbled some $1,000 to under $20,600 after touching a four-month high of about $21,550. Ether fell to $1,500 from over $1,600, with major tokens including XRP and cardano (ADA) following the brisk sliding.
Coinglass data shows over $110 million worth of futures positions betting on the rise of bitcoin and ether were liquidated in the past 24 hours, representing over 76% of all futures trades. Dogecoin (DOGE) futures also racked up $9 million in liquidations, while solana (SOL) and aptos (APT) futures took on $8 million in losses apiece.
Out of $224 million in overall liquidations, crypto exchange OKX saw the majority of losses at $109 million, followed by Binance at $90 million.
Some analysts, however, were expecting an imminent pullback regardless of news-driven trading.
“The entire recent rally has been built on the backbone of continuous market shorts keeping funding low and prices being pushed up by forced liquidations and running stops,” markets analysts at crypto exchange Bitfinex analysts said in a note earlier this week.
“A pullback might be expected with a cautious approach from bulls,” they said, pointing to the “limited traders in the market, which is evident from the market depth remaining the same week on week.”
Bitcoin and ether remained steady in Asian trading hours on Thursday.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.