Bitcoin plummeted, the crypto market suffered the largest liquidation in history, and nearly 1 million people were liquidated

On the morning of April 18, cryptocurrencies suffered a cliff-like plunge, with Bitcoin falling from $56,000 to below $51,000, experiencing the largest short-term plunge this year and even in history. Although the single-day drop in Bitcoin did not exceed the "312" plunge, the scale of the liquidation of contracts across the entire network set a historical record.

According to bybt.com data, the crypto market was liquidated for $7.6 billion in one hour. In the past 24 hours, a total of 977,037 people became victims of liquidation. The largest single liquidation occurred on Binance-BTC, with a value of $68.7348 million.

In terms of news, there has been no major negative news in the market.

1. Turkey bans Bitcoin payments. On April 16, according to a statement issued by the Central Bank of Turkey on the same day, Bitcoin and other cryptocurrencies have been banned as a form of payment for goods and services. The new regulations will take effect on April 30. Bitcoin fell by about 4% on the same day.

2. Coinbase executives sell company stocks? According to a report on April 18, data from Capital Market Laboratories and documents on Coinbase's investor relations website confirmed that Coinbase insiders sold a total of 12,965,079 shares. Based on Coinbase's closing price of $344.38 per share on Friday, the value is more than $4.6 billion. Among them, Coinbase CFO Alesia Haas sold all 255,500 shares at $388.73, while CEO Brian Armstrong sold 749,999 shares in three transactions at different prices, totaling approximately $292 million.

However, the news that Coinbase executives sold shares may be a misunderstanding. The real situation is as follows: The documents filed by Coinbase with the SEC show that only 20% of the shares registered for direct offering. The so-called 100% sale by the CEO and CFO is only a part of the shares in this 20% pool.

The reason for the misunderstanding is the lack of understanding of the DPO issuance model: Coinbase's listing model is DPO (no new shares are issued), not IPO. Only when old shareholders transfer old shares, there will be stocks available for sale in the market, and the issuance can be completed.

3. On April 18, Cailian News Agency released a message saying that there was market news that the US Treasury Department would accuse several financial institutions of using cryptocurrencies to launder money. This has also become one of the most likely reasons for the plunge.

The market leverage is too high, so a crash is inevitable?

Before this plunge, due to the sharp rise in ETH and BTC in recent days, especially ETH's continuous record highs, the market leverage increased significantly, and the market sentiment index showed "greed". According to data from The Block Research, Ethereum options open interest reached a record high of $3.57 billion on Thursday, of which Deribit accounted for 95%, at $3.39 billion, and the rest came from OKEx. Overall, Ethereum options open interest has increased by 393% this year, from $755 million on January 1 to its highest point on Thursday.

News from the U.S. Treasury Department + high market leverage triggered a series of market liquidations.

The Twitter crypto community as a whole remains optimistic about this pullback.

Crypto investor Lark Davis of Crypt Lark said,

“The bull market is not over yet! This kind of pullback is actually very healthy and can eliminate greed and help create a sustainable bull market.”

For cryptocurrency holders, this crash is a benign market adjustment that is beneficial to long-term development.