Bitcoin breaks the $36,000 barrier after a record number of crypto liquidations surpass $500 million in 24 hours

Bitcoin and altcoins are not performing well because of fears about war. Bitcoin (BTC) advanced slightly after Wall Street opened on February 24, with the Ukraine crisis and its aftermath still at the top of investors’ concerns.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Sentiment about crypto risk is expected to be the “dominant driver” in the market

Skittish markets were given the music by Russia’s overnight military incursion into Ukraine, which was followed and reverberated across global exchanges. With MOEX losing 50 percent of its value, trading was halted for a time.

Bitcoin, suffering earlier in the day, nonetheless staged a respectable comeback.

At the beginning of the week, rising tensions between Russia and Ukraine had sent cryptocurrencies tumbling. Our crypto indices were already showing significant losses across all sectors, according to Sahil Sakhrani, a market analyst at Macro Hive. The announcement of additional economic sanctions against Russia may exacerbate the situation yet again, he added, while Bitcoin’s relationship to traditional equity markets should not be forgotten.

“Now the news has worsened with an apparent Russian invasion of Ukraine followed by the EU, the U.K., and the U.S. proposing further sanctions against Russia,” he continued.

“Risk aversion is likely to be the dominant theme for markets. With the correlation between Bitcoin and NASDAQ picking up again, broader risk sentiment will likely be the dominant driver of crypto markets.”

The United States Federal Reserve caused another point of contention by suggesting that it might slow key rate increases owing to the war.

But while some investors embraced the idea, others were unconvinced. “An impending recession with rates at 0 and more capital being injected creates a worse situation,” part of a recent Twitter message stated. According to Mohamed El-Erian, such threats “arrive when Fed policy flexibility is restricted and liquidity is patchy.”

Liquidations pass $500 million

The day’s events, meanwhile, sent derivatives financing rates plummeting into the negative as traders weighed the chance of more losses. According to analytics source Coinglass, cross-crypto liquidations reached $530 million in 24 hours.

Bitcoin futures funding rates chart. Source: Coinglass

The study from Numbrs backs up the notion that bearish traders were behind the markets’ plunge. “Heavy” selling by short sellers was thus evident, according to Numbrs.

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