“The world’s largest cryptocurrency began to decline during the US cash session to about $54k-$53k handle by late afternoon as near unanimous consensus emerged around a Fed announcement that Powell would announce a much faster taper on Dec 15. Then at midnight into the early hours of Saturday morning, during the traditionally illiquid Asian session when things normally go splat in the night for cryptos as one or more super levered Asian momentum chasers blow up, Bitcoin suffered a massive liquidation and crashed down to the $42k level. Price has recovered some, now trading around $47k.
The action overnight was leveraged buyers of Bitcoin being flushed out. According to Coinglass, over 410K crypto accounts were liquidated in the past 24 hours totaling $2.6 billion with the largest liquidation being $27 million.
We note that while Ethereum (and every coin) has been crushed, it has outperformed Bitcoin in this carnage and has pushed up to its strongest relative to the larger market cap coin since 2018.
It seems that investors are taking ETH as a hedge here.
The plunge is just another sign of risk aversion sweeping across global markets. Spiking inflation is forcing central banks to tighten monetary policy, reducing liquidity for risk assets. The omicron variant of COVID-19 has also compounded risk aversion as it derails the global economic reopening.
That said, El Salvador President Nayib Bukele is using the dip to buy even more Bitcoin.”